High street retailers suffered 'worst Christmas in a decade'

The High street has suffered its worst Christmas for more than a decade, according to a survey published today that confirms retailers' worst fears.

The value of sales through stores' tills in December fell 0.4 per cent compared with Christmas 2003, the British Retail Consortium said. The survey, based on sales at stores that were open a year ago, comes in the wake of profits warnings from some of Britain's best known chains.

It was the steepest fall since March 2003, when Britons were glued to their television screens during the Iraqi war, and the worst December since the BRC's records began in 1993.

The BRC said it was probably not as bad as the slumps during the recessions of the 1980s and 1990s, when sales fell up to 2 per cent. Kevin Hawkins, its director general, said: "These figures represent the worst Christmas for retailers in the last decade." He said it was a reflection of faltering consumer confidence in the face of worries over the housing market and urged the Bank of England to cut interest rates. "It was far from the speculative hype of the 'worst Christmas in living memory' proposed by some commentators," he said.

The BRC said December got off to a "very, very poor" start, which a rebound in the final three days before Christmas Day and the first days of the sales was unable to offset. Worst hit were furniture and homewares, areas closely linked to the housing market, while clothing struggled and food and drink showed only modest growth.

The City had been put on notice for a poor Christmas after the high street's best-known names kicked off the reporting season with a batch of gloomy reports and profits warnings.

Woolworths reported zero growth in December, the clothing giant Next said the sales kicked off slower than expected as it unveiled sales growth of 2.9 per cent, while House of Fraser, the department store group, blamed a "difficult" trading environment for a 1.3 per cent fall in half-year turnover.

Marks & Spencer, once the bellwether of the high street, suffered another fall, reporting a 5.6 per cent slump in sales over the six weeks to 3 January.

But Liberty, the department store group, gave investors a brief reprieve yesterday, announcing sales growth of 14.2 per cent in December.

John Lewis said like-for-like sales over the seven weeks to 8 January rose 1.8 per cent - in line with its underlying sales increase for its first half. Gareth Thomas, its retail operations director, said: "It ... continues to be a challenging trading environment affected by ... interest rate rises, a flat housing market and high energy costs."

Luc Vandevelde, the former chairman of M&S, yesterday proved he had not lost his retailing knack despite his former charge's woes. Robert Dyas, the homewares chain that his private equity group, Change Capital, acquired last year, said like-for-like sales rose 6 per cent during December. Sales during the post-Christmas sale soared 16 per cent.

A welter of trading statements from some of the biggest blue chip retailers this week will fill the gaps in picture of the high street's health. Wm Morrison will be the first quoted food company to report today, but its progress will be marred by the deteriorating state of the Safeways stores it has yet to convert.

Nick Bubb, an analyst at Evolution Beeson Gregory, said: "It may be that most of the really bad news from retailers is now out of the way, after last week's early warnings."