More gloom as retail firms report slump

Published on Tuesday 6 January 2009 08:58

SOME of the biggest names on the UK high street today provided more gloom for the retail sector with a series of downbeat announcements.

Fashion chain Next – one of the few to not resort to heavy discounting ahead of Christmas – said like-for-like sales in its stores slumped by seven per cent between the end of July and Christmas Eve.

Leading department store group + also revealed a 3.3 per cent decline in like-for-like sales in the 12 weeks from October 21.

Marks & Spencer is understood to be preparing to axe 1000 shop floor jobs and hundreds more in head office and support sectors.

It follows the loss of 1000 jobs yesterday when Adams Childrenswear closed 111 stores, making 850 employees redundant and the 45-store Passion for Perfume group collapsed into administration, with 195 jobs lost.

The wave of negative announcements come as retailers desperately try to offload winter stock in the post-Christmas sale season.

Following its update on trading, Next said in a statement: "We anticipate that consumer demand will remain weak during 2009, although we would caution against some of the more extreme economic forecasts. On the negative side, we expect falling house prices, unemployment and the fear of unemployment to continue to restrain spending."

Overall retail sales at Next declined by three per cent, while the combined sales of Next Retail and the online Next Directory declined by 1.9 per cent on the same period last year.

Next said falling food, fuel and energy prices would help give people the chance to get their finances in order in the year ahead.

Despite its 3.3 per cent decline in like-for-like sales in the 12 weeks since October 21, Debenhams was more upbeat about its performance, highlighting that pre-tax profits for the 18 week period were ahead of last year.

Rob Templeman, chief executive of Debenhams, said: "Our trading strategy for the first 18 weeks of the year has resulted in further market share gains and a creditable sales performance given the extremely difficult and volatile conditions seen across the high street."

But he added that the trading environment is likely to remain "challenging" for the whole retail sector.

M&S is expected to confirm its job losses in a trading update tomorrow which is also expected to reveal very poor Christmas trading.

While the high street was busy over Christmas, the British Retail Consortium warned that a last-minute boost would not make up for hard times.

A string of businesses including Adams, Woolworths, Zavvi and MFI collapsed recently, while Mosaic, owner of the fashion chains Principles, Oasis, Karen Millen and Warehouse, has called in an emergency restructuring team from Deloitte.