Cracks begin to show among retailing's weaker players

The first signs of a shake-out on the high street emerged yesterday when profits warnings from Austin Reed and Allders contrasted with a bullish set of figures from Selfridges, the department store retailer.

The warnings dented confidence in the sector with shares in groups such as Debenhams and New Look falling as analysts feared that a slowdown in consumer confidence was beginning to emerge. Though yesterday's official retail sales data for August showed an unexpected increase in sales, the warnings raise questions about September's trade.

John Baillie, analyst at SG Securities said: "It hasn't been great out there in September with warm weather affecting clothing sales. As the market slows down a little it is sorting out the men from the boys."

Vittorio Radice, chief executive of Selfridges, confirmed this view as the retail group reported a 10 per cent leap in trading profits and strong underlying sales growth. He said: "If you invest and produce something new, you will get market share. If you remain a classic retailer where your only weapon is price, you're going to find a lot of competition."

Allders, the department store retailer, said recent trading had been "significantly below expectations" with like-for-like sales in the last five weeks down 5.1 per cent on last year. It said operating profits for the year to 30 September would be £2m below the previous year's £14.8m. Harvey Lipsith, chief executive, said: "Recent trading in our segment of the market has been extremely difficult as consumer confidence has wavered." The shares fell 15.5p to 113.5p.

Austin Reed, the fashion retailer, said it was seeing sharp swings in trade from week to week, with underlying sales in the past five weeks down 12 per cent on last year. Though profits in the six months to 19 September were up 8 per cent to £2.7m, the company said footfall in August had fallen. The shares sank 18 per cent to 102p.

Selfridges shrugged off these concerns with underlying sales up 7 per cent in current trading, following a small rise in pre-tax profits to £15.8m for the six months to 3 August. However, the shares fell on news that the company's redevelopment of its flagship store on London's Oxford Street will have to be slightly less ambitious due to planning restraints.