TJ Hughes warns of stagnant sales

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Shares in TJ Hughes, the struggling clothes and homeware discount department store chain, yesterday plunged 17 per cent after it warned that it would report a pre-tax loss in the first half-year.

The group blamed a "highly unusual" five months, which has included a failed management buyout from its former chairman, Eric Hodges. Its shares closed at 126p, valuing the company at £38m. In March, the stock was worth more than £3.

The retailer, which bulk-buys branded goods, then resells them at a discount, also suffered from the discovery of a £3.6m stock over-valuation earlier in the year after a new computer system revealed its previous paper calculations had overvalued goods. This prompted the resignation of the finance and buying directors and forced the company to cut margins to clear old stock.

Like-for-like sales in the six months to 28 July are forecast to be flat but the company said an exceptional surge in mobile phone sales last year had affected comparative figures, as had the clearance of old stock. Last year, group pre-tax profits were up 42 per cent to £2.6m.