Budget fears hitting sales, says Etam

ETAM, the women's clothing chain, fears that speculation about tax increases in next month's Budget is depressing consumer spending, writes Paul Durman.

The company, which earns the bulk of its profits in the second half, has experienced a small fall in like-for-like sales in the past few weeks.

While recognising that last month was the wettest September for five years, Keith Miles, Etam's finance director, said: 'People are really very conscious about what a November Budget may mean.'

Etam is also facing tougher competition. Formerly struggling rivals - such as Burton, which owns Dorothy Perkins - have 'got themselves organised'.

These cautious comments on trading prospects prompted Etam's shares to slip by 11p to 258p. The City had been looking for full-year profits of pounds 14m or so.

In yesterday's first-half figures the company's profits doubled to pounds 2.4m, though sales edged ahead by only 2 per cent pounds 108.2m.

The company increased its interim dividend 6 per cent to 1.75p.

Capital expenditure in the 28 weeks to 14 August was pounds 2.3m, down pounds 1.9m on the same period last year.

Etam hopes to eliminate its negligible borrowings by the end of the year.