GUS underlined the calamitous state of the high street yesterday when the retail-to-financial conglomerate reported the first fall in underlying sales at its Argos chain for six years.
David Tyler, GUS's finance director, said like-for-like sales at Argos fell 1 per cent during the three months to 31 March. The group does not expect sales to pick up all year. "We are planning on the assumption that things won't get better for at least six to 12 months," Mr Tyler said.
The 592-strong chain of catalogue stores is regarded as a shopping bellwether because it sells such a wide variety of goods. It leaves clothing and food alone but stocks pretty much everything else.
GUS said consumer spending in the UK had "slowed sharply" since November. This, combined with soaring costs - particularly in business rates and energy bills - has spelt bad news for scores of the country's retailers, several of whom have been forced out of business.
Although GUS is mid-way through a strategic review that is expected to see it spin off its Experian financial services arm, Mr Tyler said the dip in its UK retail fortunes would not put pressure on the board to speed up its decision. "The review is something we're thinking about in the context of long-term shareholder value. We're not too influenced by the vagaries of the consumer cycle in the UK," he said.
Nevertheless, analysts trimmed their pre-tax profit forecasts for the year to March 2006, cutting 4 per cent off their numbers to about £1bn. Shares in the group fell 12p to 901.5p.
At Argos, the fall in sales came in spite of the group's attempt to boost demand by reinvesting gross margin gains in lower prices. In the six months to 31 March, underlying sales were flat, although the cost of shopping at Argos has fallen by 6 per cent in the past year. Demand for "big ticket items" - mainly furniture and white goods - has been particularly weak, the group said, while sales of consumer electronics have held up. The picture was better at Homebase, the home furnishings chain, where like-for-like sales rose 2 per cent during the second half.
Experian continued to power ahead, with a 18 per cent increase in sales at constant exchange rates - its third consecutive year of double-digit growth.