Sales at Marks & Spencer have fallen short of expectations, sparking fears that the retailer's recovery may have already stalled.
The company's recovery seems to have been short-lived
Sales for the three months to 27 March dropped 3.4% from a year earlier. Food revenues slid 1.4%, while sales of clothing dropped 2.5%.
"Sales this quarter are clearly not good enough," said chief executive Roger Holmes.
He said further cost cutting would see the company hit 2004 profit targets.
"We are taking action on a number of fronts to accelerate the transformation of the business and
deliver improved performance," Mr Holmes said.
One of the best-known names on UK High Streets, Marks & Spencer has seen sales suffer amid increasing competition from rivals such as Next.
Its clothing division, once one of the most successful, has become a drag on growth as many customers complain that its designs are dated.
This has been compounded by an increase in the number of other retailers offering cheaper, sassier products, analysts said.
Mr Holmes said that he expects Marks & Spencer's share of the clothing market to have shrunk for a second straight quarter. It currently accounts for about 11% of UK sales.
Earlier this year, the company appointed Vittorio Radice, the former head of Selfridges, to try to turn things around.
Mr Radice will take over the clothing business this month after running the company's home furnishings division.
That department is also suffering from underperformance.
The company reported a 14% slump in home furnishings revenue during the past quarter.
The company also said this month that it is planning job cuts to trim costs.
But investors, it seems, may still need convincing.
Marks & Spencer shares closed down 12.5p, or 4.5%, at 264p on Wednesday.
"The recovery story has gone into reverse," analysts at broker Panmure Gordon told their clients in a note.
Brokerage firm Cazenove, meanwhile, cut its forecast for the company's 2004 profit, according to Reuters.