High street braced for more warnings

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The Independent Online

The retail sector is braced for a string of warnings about weak trade fuelling fears consumers are starting to tighten their belts ahead of a downturn.

The retail sector is braced for a string of warnings about weak trade fuelling fears consumers are starting to tighten their belts ahead of a downturn.

Clothing retailers in particular have experienced a difficult month as the mild weather has hit sales of knitwear and coats. But concern is growing that the warmer temperatures may be only part of the reason and that consumer confidence is starting to weaken in the face of increasing uncertainty about the outlook for the economy.

One leading retail executive, said: "Everyone is having a torrid time. Trade is not good." One chief executive of a major retailer added: "It's been a difficult three weeks. Last year we had a chilly September with clear blue skies. This time it is several degrees warmer. I'd be amazed if anyone is spending much on knitwear and outerwear."

Grim news is expected from House of Fraser, which reports its interim results tomorrow. Over the weekend it was heavily advertising big discounts of up to 20 per cent on certain ranges. Other retailers reporting this week include Laura Ashley and Alexon, which includes Dolcis shoes and the Dash clothing brand.

Nick Bubb, a retail analyst at SG Securities, said: "Clothing is the issue and the big one is House of Fraser. It is quite heavily geared, has lots of competition and a big tail of bad stores. It hasn't felt right for a while." Mr Bubb said retailers aimed at more mature customers might be feeling the pinch most. "The older consumers are probably the ones holding back (on spending) as they tend to be more cautious. Stores aimed at younger audience should fare better."

The high street has already been hit by two warnings last week. Allders, the department store group, said recent trading had been "significantly below expectations and that it would miss its full-year profit targets. Austin Reed, the clothing retailer aimed at 30 to 45-year-olds, said underlying sales were down 12 per cent on last year.

On Friday the latest John Lewis figures showed its department store sales in the week to 14 September were up 4.1 per cent on the same period last year, below the group's internal forecasts. Fashion was one of the worst performers with sales down 9 per cent. Childrenswear was also weak, raising fears over Mothercare trading. But the company said yesterday it had no plans to issue a trading statement ahead of a scheduled announcement next month.

However, some retailers remain confident that this month is just a blip. One retail chief executive, said: "I don't think it is a slowdown, though I do believe this Autumn will be tougher. If people (retailers) are going to have trouble it will be the ones who have been too bullish with their sales projections and bought too much stock."

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