Shares in Britain's Marks and Spencer group hit fresh lows, perilously close to net asset value, yesterday amid evidence of a startling fall in the group's food sales.

M&S gave information to this week's UK competition commission probe on supermarkets, which showed operating profits for the food business had fallen from a five-year peak of £247 million sterling in 1996 to £137 million in 1999.

Analysts had generally thought the retailer's food business was one of its bright spots as weak clothing sales took a devastating toll on profits.

A spokesman for M&S said profits had been affected by increased costs and investments such as in-store bakeries and butchers.

"At these sort of levels you can't avoid speculation that there might be a bid and they look cheap on the basis that a recovery might come through from the end of next year," said Mr Matthew McEachran at Investec Henderson Crosthwaite.