Retailers alarmed as sales slump

Consumer demand has slumped, suggesting the UK's spending boom is over, according to retailers.

13:07 24 March 2005

Consumer demand has slumped, suggesting the UK's spending boom is over, according to retailers.

As levels of consumer debt soar, the high street is becoming concerned that Britons are finally reining in their spending.

Both retailers' reports and the latest economic data are showing that interest rate rises are starting to take effect, as the housing market cools and fears about rising debt grow.

"We've had a phenomenal run - around ten years of spending growth," Colin Morton, fund manager at Rensburg, told Reuters news agency.

"But we're seeing the consumer take his foot off the accelerator a little now."

Fashion store chain Next, electrical goods outlet Kesa Electricals, retailer Woolworths and tile company Topps have all referred to a challenging retail market this week.

Photographic goods firm Jessops predicted that a slide in demand for digital cameras would lead its annual profits to fall "significantly below" previous expectations, while health and beauty chain Boots also reported full-year profits would miss analysts' forecasts earlier this month.

Next said its sales had slipped in recent weeks, as demand eased. However, chief executive Simon Wolfson said the company had planned for the slowdown.

Topps Tiles, Britain's biggest ceramic tile and wood flooring specialist, said it was experiencing "very tough trading", with like-for-like sales down two to three per cent in the past four weeks.