High street jitters as Christmas looks bleak

BRITAIN'S HIGH street retailers looked set for an increasingly nervous Christmas yesterday after a string of downbeat announcements pointed to weakening consumer spending.

Arcadia, the clothing retailer that includes Burton Menswear, Principles and Top Shop, led the way with a shock profits warning which knocked 26 per cent from the company's share price.

Separately, Allied Carpets said its already weak sales had fallen further and that trading patterns were unpredictable.

Hornby, the model railway and Scalextric group, also issued a profits warning and said nervous retailers were holding back on orders due to fears of poor Christmas demand.

The catalogue of woe sent retail stocks tumbling. While Arcadia shares fell 75.5p to 212.5p, rival retailers such as Debenhams, Next, Sears and Oasis Stores also suffered sharp share falls.

Arcadia said its sales in the first half of its financial year had fallen short of expectations and that the outlook for the rest of the period was not as encouraging as previously anticipated. It blamed a "sharp downturn" in consumer spending and an exceptional level of competition which had led to an increase in discounting.

Consequently, in the first 13 weeks of Arcadia's first half, group sales were up by just 0.4 per cent while sales densities were down by 1.8 per cent.

The Arcadia warning angered City analysts who claimed the company had said trading was in line only six weeks ago.

"It will take a while for them to re-build their credibility after this," one analyst said. Brokers were forced to cut profit forecasts sharply, with BT Alex Brown and HSBC James Capel reducing their full-year expectations to pounds 60m from pounds 90m and pounds 80m respectively.

Arcadia's warning follows a string of grim statements from Britain's retailers as the fear of recession gathers pace.

Marks & Spencer announced a 23 per cent fall in profits last month and described the clothing market as a "bloodbath". Since then there has also been bad news from Storehouse, which owns Bhs and Mothercare, and other fashion groups such as New Look.

John Hoerner, Arcadia's chief executive, said: "You never know for sure how Christmas selling is going to come, and different patterns have occurred in recent years, but with the current trend of the start of the season, it certainly isn't good news."

Mr Hoerner added that the downturn had not only hit its high street chains but also its home-shopping joint venture with Littlewoods, mail- order brands Hawkshead and Racing Green, and catalogues linked to the Evans and Principles chains.

Meanwhile Hornby, the trains and Scalextric group, reported a sharp fall in first-half profits from pounds 973,000 to pounds 425,000.

Peter Newey, Hornby's chairman, said: "A lot of consumers are very nervous, and retailers think there is going to be a recession. That has had an impact on suppliers."

The problem has been exaggerated by retailers keeping a tight control on stock and delaying regular christmas orders. In an effort to control costs, Hornby will be moving almost all of its model railway production to China next year.

Allied Carpets said underlying sales in the first 22 weeks were down by 8.2 per cent compared to the 7.5 per cent fall announced just five weeks ago.

The details were included in a circular sent to shareholders relating to the sale of its Carpetland stores to the rival Carpetright group. Allied Carpets has been the subject of bid speculation with Carpetright and Alchemy Partners, the venture capital group, expressing interest.

Start your day with The Independent, sign up for daily news emails
newsAnother week, another dress controversy on the internet
Dave Mackay lifts the FA Cup in 1967 having skippered Spurs to victory
Life and Style
Scientist have developed a test which predicts whether you'll live for another ten years
Life and Style
Marie had fake ID, in the name of Johanna Koch, after she evaded capture by the Nazis in wartime Berlin
historyOne woman's secret life as a Jew in wartime Berlin
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn