A 2% cut in food prices over the past year had halted eight consecutive quarters of falling sales flat but like-for-like sales were no more than flat in the 13 weeks to 26 August.
Further margin cuts would be necessary, said the M&S executive chairman. "The biggest drop took place a year ago, but we want to remain competitive," he said. "We want to maintain our quality standard and trade our business through the third quarter, so I'm sure there will be some further margin investment, but hopefully not to the same degree we've had."
However, margins in the business overall would be boosted by tighter stock control and better deals with suppliers, he said.
Sir Stuart first outlined the price cut strategy six months ago. "We have definitely sharpened our prices and we have sacrificed margin deliberately," he said at the time. "I'm confident we will see an improvement next quarter on this quarter."
This week's results, which revealed total UK like-for-like sales down 0.5%, and no change on food sales, contrast with Waitrose's strong performance this year. Its interim results to 1 August showed like-for-like sales up 1.8%.
Sir Stuart denied that Waitrose's plans to open 300 convenience stores and expand its franchise network in service stations would put even more pressure on M&S. "Waitrose is a fine business," he said. "And we have a fantastic and unparalleled track record in developing quality foods and innovation over 50 years.
"We have seen competitors come go; we've still managed to survive. We are cheaper on 1,000 items plus than Waitrose. They have been slightly ahead of us on like-for-likes, but that doesn't take into account inflation. We have had 2% deflation while the market has had 4% inflation."