Oxford Street stores see profits go down the Tube

The Thing Is: The Central Line

For the browbeaten regulars on London's Central Line, there is something soul-destroying about the phrase "as soon as possible". When they refer to repairs, grim experience shows these words can be stretched out to cover days, months and even years.

For the browbeaten regulars on London's Central Line, there is something soul-destroying about the phrase "as soon as possible". When they refer to repairs, grim experience shows these words can be stretched out to cover days, months and even years.

Last week, with the publication of the interim report on the Central Line derailment, the miserable truth emerged: nobody at the Tube now has any idea when London's most important line will run again.

While that is very depressing news for commuters, it will pose an even more alarming threat to British retailers. Most of them have their flagship stores along Oxford Street, which is normally served by four Central Line stations. Now it isn't, and the impact on sales will send a shudder through the companies. Analysts have already started to downgrade earnings per share expectations for the most exposed stores.

However big that hit actually is, the high-street retail sector is only a few weeks away from announcing a string of results, and the Central Line closure is expected to come up as an excuse for sluggish sales. This sort of thing is nothing new: the World Cup, the May-Day riots and even a burst water main have all figured in sheepish explanations for problematic trading.

The thing is, although these explanations do sound trumped up to disguise management problems, the retail scene along Oxford Street is more fragile than it would seem. Last week's peace march in effect lost Oxford Street traders a day of proper trading, and analysts see it as "inevitable" that the event will crop up at results meetings. As retail consultancy Verdict explained: "The reality of Oxford Street is that sales are about bums on seats. Once you get them into your shop, they buy things. The Central Line delivers more footfall than any other line, and we are talking here about an industry where small changes in volume make huge differences to profitability."

The shops along Oxford Street play a disproportionately important role to their parent companies, because Oxford Street gets the tourists and people who have come in from outside London. The companies pay astronomical rents to keep their presence on Europe's premier shopping street. Even in a big nationwide chain like Marks & Spencer, the contribution from its two Oxford Street branches dwarfs the rest.

That worry has left analysts such as Matthew McEachran at Investec concerned that it could be more than just Selfridges getting burnt. Debenhams and House of Fraser have placed a lot of hope in the performance of their Oxford Street offerings. John Lewis blames the Central Line for a monthly sales slump of 7.3 per cent at its Oxford Street flagship.

The problem for Oxford Street traders is that the Congestion Charge will start to bite before the Central Line starts running.