Retailers braced for a miserable Christmas as shares tumble

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The Independent Online

High Street retailers are hoping for a last minute surge in sales as they face the prospect of the worst trading Christmas in years.

John Lewis yesterday added to fears of a grim festive season with news that sales at its department stores fell almost 5 per cent last week.

The high street bellwether followed profit warnings from menswear group Austin Reed and womenswear outfit New Look that sent shares tumbling across the sector. Marks & Spencer, French Connection and Next have all been downgraded by City analysts who blame warm weather and a consumer slowdown.

Estimates of the number of visitors to shopping centres by FootFall shows that numbers are down more than 4 per cent on last year.

John Lewis said sales in its nationwide network of stores fell 4.9 per cent last week compared with the equivalent week in 2002, following a 1 per cent drop in the previous week. Gareth Thomas, director of retail operations, blamed a combination of warm weather, the Rugby World Cup and the state visit by US President George Bush.

A survey of consumer confidence on Thursday showed households had suddenly turned negative about buying "big ticket" items such as TVs, videos and three-piece suites to the greatest degree for almost three years. Economists said this was probably the first sign this month's rise in interest rates had dampened consumer willingness to spend and borrow.

John Butler, economist at HSBC bank, said confidence had also been knocked by a fear that more increases were in the pipeline and by a fall real wages.

However Bill Moyes, director of the British Retail Consortium, said he expected a "reasonable" Christmas but said it would come in the form of a last-minute surge.

Richard Hyman, director of Verdict Research, predicted a "happy Christmas but a hard New Year" for retailers.

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