Retail nerves prompt Debenhams to slash prices

Department store chain Debenhams yesterday unveiled price cuts of up to 25 per cent, in a sign that retailers are increasingly nervous about the outlook for consumer spending.

It said it was lowering prices now on "tens of thousands" of goods in a bid to attract wary shoppers, rather than waiting to use discounting to clear stock at the end of the season.

Figures published yesterday by the British Retail Consortium showed retail sales values rose 1 per cent year-on-year in August.

But growth was boosted by discounting and analysts fear that steps to rein in government borrowing, like higher taxes and public spending cuts, will hit demand in coming months.

Execution Noble analysts said their latest monthly "Spend Trend" survey showed consumer confidence was weak.

They added: "Public-sector workers are becoming increasingly fearful of redundancy whilst rising retail prices is now the issue that makes consumers most wary about the outlook for their financial situation."

Execution Noble kept its "underweight" investment rating on the general retail sector.

News of the sale came as Debenhams launched its first range of menswear in three years, targeting men aged 18-30.