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News - 12 October 2006

Who’d be a fashion retailer in the UK?

A depressing combination of an unusually warm autumn and new fashion lines that just haven’t hit the right note with consumers is causing serious problems for fashion retailers. This situation seem to be turning into an annual occurrence.

The high street chains have run into problems trying to shift winter coats and woollies off their shelves, not helped by a sea of dull grey tailoring that was supposed to be this winter’s “look”.

Cut price sales have started earlier than usual at several chains and some retail analysts believe it is only a matter of time before stores are forced into profits warnings as a result of the slump in sales

Last month the fashion chain Monsoon warned that underlying sales were down 6% and trading was a "cause for concern".

On Wednesday the discounter Matalan revealed that the past six weeks had seen it slip back into negative trading, despite a high-profile, and controversial (at least to Marks & Spencer) marketing campaign. Recent like-for-like sales were nearly 4% down on last year. The company blamed the weather "with a poor performance being seen in warmer, wetter weeks".

Analysts also believe Debenhams has been among those hardest hit, with speculation suggesting the group has just had its first year-on-year weekly sales increase for two months but this won’t be confirmed until next month.

Even the resurgent Marks & Spencer is not immune with retail insiders suggesting that it is also having a tougher time. In July its chief executive, Stuart Rose, reported a unexpected 10.5% improvement in like-for-like sales of general merchandise - which includes clothing and house ware. But it is understood its recent experience has fallen well short of those levels.

Fashion chain New Look is also said to be finding the going tough and the Next boss, Simon Wolfson, recently warned sales were likely to slow.

Not all retailers are suffering equally. Last week, Tesco indicated that its fashion sales were still robust. They had climbed 19% in the past six months.

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