Homestyle axes dividend after letdown by Harveys

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Homestyle axed its interim dividend yesterday after a terrible summer for its Harveys furniture arm dragged it sharply into the red.

The struggling retailer racked up interim losses of £11m, confounding analysts' expectations of profits of £1.4m. Its shares plunged 8 per cent to 124p.

Gillian Hilditch, a retail analyst at Arbuthnot, said: "As always it was an extremely unimpressive performance from the company."

Despite scrapping plans for an interim payout, the company said it expected to pay a final dividend. But first it must emerge unscathed from its most important trading period at a time when conditions on the high street are worsening.

Richard Ratner, at Seymour Pierce, warned that the company would have "severe problems" if, as feared, the "all-important" January sale is unsuccessful.

Homestyle said like-for-like sales at Harveys, which also sells kitchens, slumped 7 per cent in the six months to 1 November. Excluding the Kitchen Studio business, which it is considering selling, the division's losses spiralled to £6m.

Although it said revamping the stores' product range had helped like-for-like sales to rebound, rising 6 per cent in the past six weeks, analysts noted this was against very weak comparatives.