Woolworths to reveal further slide in sales

Woolworths is set to become the latest retailer to report a slump in sales this week, as prospects for its crucial Christmas trading period start to darken.

Analysts believe current trading could be down by as much as 5 per cent, and the news is likely to be received badly by the City as it comes on the back of a 4.4 per cent slide in underlying sales during the first half. This will add to concerns about the company's future.

Analysts believe its business model of selling a variety of goods, such as DVDs and toys, faces severe competition from expanded ranges at the supermarkets. "I would have thought there has been a further deterioration in sales," said Richard Ratner of Seymour Pierce. "I would not be surprised if [the forecasts] came down again."

Woolworths had been banking on a recovery in the second half to offset its poor first-half sales performance, said Nick Bubb, an analyst at Evolution Securities. But instead of a revival, he expects like-for-like sales to be down 2.5 per cent from a year ago. Mr Bubb added that Christmas trading this year could be even worse than the weak performance recorded in 2004, when sales fell by 1.5 per cent.