Though the warning was mild, it surprised City analysts who have come to rely on GUS as one of the market's steadiest, if unspectacular performers.
John Richards of NatWest Securities said: "It is only a modest adjustment but it is a shock coming from GUS. The whole idea of GUS is that it is a stock that allows you to sleep at night."
Another analyst said: "It is unprecedented. These things just don't happen with GUS." The shares fell 30p to 687p.
The company warned that market expectations of its profits were too high and that its profits for the year to March would be between pounds 578m and pounds 581m. This was 2 per cent lower than the consensus forecast of pounds 595m.
The company insisted that its first ever trading statement was not a "warning" but a "clarification". Richard Pugh, chairman of the group's home shopping division, said: "It is not any sort of warning. We saw what the forecasts were and felt the market would appreciate us clarifying the position. Some analysts' forecasts had run rather ahead."
He added that, barring unforeseen circumstances, GUS would still report its 48th consecutive year of increased profits when it reports its results in July. Even the lower profits of pounds 578m would be higher than 1995's pounds 560m.
The company said unaudited profits for the year to March 1996 indicated a 3.5 per cent increase in group sales with consumer and corporate finance advances up 5 per cent.
The home shopping business has seen demand affected by a "cautious and selective approach from customers", as well as the unseasonal weather and higher paper and printing costs, which had made the group's catalogues more expensive to produce.
Home shopping sales in the UK would be some 2 per cent lower, though sales in Europe were 5 per cent up.
Other main trading divisions in the group, such as the Burberrys chain, should show a "satisfactory improvement" in profits, the company said. The company has also collected a lower level of VAT. In previous years the company has received interest payments on VAT over-payments.