Retailers to cut prices in run-up to Christmas after poor November sales

High street sales have been hit hard in November forcing many retailers to cut prices in the run-up to Christmas.

The wet, mild weather last month has been particularly damaging for clothing retailers with stock levels now so high in some cases that analysts believe it will be difficult to clear ranges before the start of the winter sales.

Leaked British Retail Consortium (BRC) figures covering the first three weeks of last month show womenswear and children's clothing sales showed no growth on last year. The full monthly figures will be published next Monday.

Richard Ratner, retail analyst at Seymour Pierce, said: "It has been absolutely awful for clothing. A lot of the companies are finding it difficult to match last year's numbers. The problem is we are getting so close to Christmas now. But it is all weather related, I think, not an underlying problem with consumer spending."

Tony Shiret, at Credit Suisse First Boston, said: "It has been pretty poor. Consumer confidence is giving off mixed signals but some companies' inventory policies aren't helping with large stocks that will need to be pushed hard. Consumers might say 'I'll wait until the sales'."

Anecdotal evidence suggests some retailers have already decided to "cut and run" with pre-Christmas discounting.

Littlewoods cut 20 per cent off all clothing last weekend. Tesco has cut 20 per cent off its clothing ranges for a week-long period which ends on Tuesday, though the supermarket claims it is still outperforming the market.

House of Fraser has been running a series of promotions in its department stores while Bhs, part of Philip Green's retail empire, has also been running selective promotions.

"One of the big questions is what Philip Green decides to do," one analyst said. "His business is privately owned so he can do what he likes. Now he's got Arcadia too, a move by him would have big repercussions for everybody."

Younger fashion is believed to have held up quite well but the mid-market is understood to be weaker. City rumours have suggested that like-for-like sales at Next were down 8 per cent last week compared with last year, 10 per cent down the previous week and 14 per cent down the week before that. "Next has got it wrong in womenswear," one analyst said.

Marks & Spencer is believed to be reasonably solid though some prices have been cut and stock levels are high as the group chases sales growth.

John Lewis Partnership, the only UK retailer which reports weekly figures, reveals the problem. Figures reported on Friday for the week to 17 November showed department store sales up 4 per cent on the same week the previous year. However, the company is well short of its sales growth target of 6.6 per cent for its half year. So far cumulative sales are up just 4.6 per cent on last year. Clothing has been one of John Lewis' worst departments with sales up just 2.5 per cent year on year.

Household goods sales have been stronger, as demonstrated by good figures recently from MFI. In the health and beauty sector Boots has been running lots of "three for the price of two" deals but says these were planned. Analysts say Boots has been seeing "steadily improving" sales.

Toys have been in line with expectations. Simon Burke, the chairman of Hamleys, said: "We were quite satisfied with November overall."

A BRC spokesman said: "There is no sign that the consumer is reining back. But given the level of (household) borrowing it is possible people will start to cut back in the New Year."