High street gloom raises rate-cut pressure
The downbeat statements increase the pressure on the Bank of England's Monetary Policy Committee to opt for a significant cut in interest rates today when it completes its monthly meeting.
Shares in DFS Furniture crashed to an all-time low after a gloomy update on current trading at the group's annual meeting.
Sir Graham Kirkham, DFS chairman, said same-store sales are running at 9 per cent below this time last year. The statement, which pushed DFS shares 8p lower to 157.5p, forced analysts to cut their full -year profit forecasts from pounds 3.6m to pounds 27m.
Separately, Courts reported a 37 per cent drop in pre-tax profits to pounds 6.1m in the first half. The company blamed weak markets in the UK and overseas and said bookings in the second half were well down on last year. Consequently the company said full-year profits will be below last year's record level of pounds 32.3m. Courts plans to slow down its expansion programme to reflect the slowdown.
There was more upbeat news from Kingfisher, the Woolworths and B&Q retail group. Shares in the company soared by 11 per cent after it reported a 5.1 per cent increase in comparable store sales in the 13 weeks to 31 October. However, the group said that growth had slowed since the end of the quarter.
Kingfisher's largest businesses, B&Q, Woolworths and Darty, the French electrical retailer, all achieved like-for-like sales growth of around 6 to 7 per cent in the period. Comet was the only weak spot, with a 1.6 per cent drop in same store sales.
Separately Wickes, the DIY retailer, reported a solid underlying sales increase of 3.9 per cent. Heal's, the upmarket furniture stores group, also impressed with a doubling of full year profits to pounds 3m and a statement that current trading is "satisfactory."
As pressure grows on the MPC to cut interest rates today, separate delegations from union members and from the North-east lobbied the Bank of England yesterday. Roger Lyons, general secretary of the MSF union, handed in a giant Christmas card and a giftwrapped petition bearing more than 10,000 signatures. The MSF delegation sang, to the tune of Jingle Bells: "Eddie George, Eddie George, cut the interest rate. Save our jobs in industry before it is too late."
Bill Midgley, president of the North-east Chamber of Commerce, said: "It is unreasonable to expect one area of the country to take the brunt of recent job losses. What the North-east needs now is support from the Monetary Policy Committee."
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