Body Shop adds to retail gloom

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The Independent Online
TWO retail groups, Body Shop International and Alexon, reported disappointing Christmas sales yesterday, triggering a flurry of share price and profits downgrades. Both announcements were on top of profits warnings issued last autumn.

Body Shop said that after stripping out the impact of new stores, UK sales fell by 8 per cent in the nine weeks to 26 December. However, they improved to show a 4 per cent rise in the three weeks to 2 January.

Gordon Roddick, chairman, said: 'November was extremely bad. Things picked up in December.' The south of England was most depressed. Overseas sales were stronger, with the US showing 4 per cent like-for-like growth and elsewhere 2 per cent.

Body Shop has been experimenting selling tights, socks, pencil cases, notebooks and other products with an endangered species design and Body Shop logo. 'They walked off the shelf,' Mr Roddick said.

Analysts reduced their pre-tax profits forecasts for the year to February from about pounds 24m to pounds 21m. It made pounds 25.2m last time. The shares fell 15p to 153p.

Alexon, which includes Dash and Eastex women's clothes shops, warned it would lose about pounds 1m in the year to January. There will be no final dividend. Analysts had expected a pounds 4m profit. The shares plunged 9p to 68p.

Banks led by Barclays have agreed waivers on loan covenants that have been breached over the past two months. Alexon has borrowings of about pounds 24m and has missed interest cover targets.

Christmas sales were very poor, with the Dash chain understood to have experienced a collapse in sales of about 20 per cent as its key line - women's tracksuits - fell out of favour. The Alexon chain's sales fell by less. Eastex was flat. The group is in the process of axing 50 head office jobs in a reorganisation that will cost an exceptional pounds 1m. The annual savings will be about pounds 1m, it said.