Weak store sales bring new fears

JOHN LEWIS department stores suffered their worst trading of the year last week, raising fears that demand on the already quiet high street may be weakening further.

Other non-food retailers privately report an alarming deterioration in sales in recent weeks, one describing it as 'the worst June in living memory'.

It is not clear whether the decline is a temporary result of the hot weather and other special factors or a more permanent slide in consumer confidence.

John Lewis, the only big retailer to publish up-to-date sales data, believes shoppers may have stayed at home last week to watch Wimbledon. However, it has now seen marked sales declines in three of the past five weeks.

Its department stores rang up pounds 17.5m at the tills last week, the lowest in any of the 22 weeks of the current financial year and 4 per cent down on the same time last year.

For the first five-and-a-half months, sales are running 0.6 per cent lower than last year and the gap is widening. In volume terms the decline is much larger.

Geoffrey Maitland Smith, chairman of the Sears retail group, said: 'We are sharing the same lack of interest from the customer. And the further south you go the tougher it is. In some areas like Selfridges it is a real struggle to keep level (with last year).'

However, other areas like children's wear, younger women's wear and shoes were performing better. Sears runs a string of fashion multiples and shoe shops, including Miss Selfridge, Saxone and Freeman Hardy Willis.

Mr Maitland Smith said the poor demand was 'bound to continue until people feel their jobs are safe', a sentiment echoed by other retailers.

Richard Hyman, managing director of the retail consultancy Verdict Research, said: 'I have been accused of being excessively gloomy in the past, but I have been proved right. It gives me no pleasure to say it, but I think it is getting worse on the high street.'

Clothing sales were poor, he said, and electricals and furniture were 'going backwards'.

A director of another clothing retailer said: 'Last week was a very bad week. You have to go back a long way to find worse. But it may prove to be an aberration.'

A director of a large non-food retailing empire said: 'There have been a lot of bad vibes from retailers in June. Consumer confidence is still low. It is not easy.'

Ron Trenter, chairman of Texas Homecare, said: 'June was a bit worse than May, but there is not a lot in it.' Sales of kitchen furniture were poor, but garden products did well because of the good weather. The gross margin was down.

However, other retailers were slightly less bearish. Terry Maher, chairman of Pentos, the bookselling group that owns the Dillons chain, cautioned against reading much into any single set of figures, saying: 'We see no signs of any improvement yet, but I would be surprised if things had got worse.'

A spokesman for Marks and Spencer said trading had not become worse, though it was still tricky. Coincidentally, the stockbroker Barclays de Zoete Wedd cuts its full-year profits forecast for M&S by pounds 10m to pounds 730m.

Senior retailers, who would like to see interest rate cuts, this week met Norman Lamont, the Chancellor, at a private lunch hosted by the British Retail Consortium.

James May, director-general of the BRC, said he expected the official retail sales figures for June - due in two weeks - to show a fall on May. He denied the retail climate was getting any worse - 'but things are only getting better by very small degrees.'