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Dixons and Next hit by consumer downturn.

Further proof of an end to the boom times on the UK High Street was delivered by two of the retail sector's biggest names yesterday.

The confirmation came courtesy of electronics retailer Dixons, which warned that its Christmas performance would leave profits short of expectations, and from Next after a lacklustre trading season.

And the slowdown was confirmed by the British Retail Consortium, umbrella body for the major chain stores.

Consumers have proved the backbone of the UK economy but there are increasing signs that shoppers are now keener to tighten purse strings.

However, Dixons, which also owns the Currys, PC World and The Link chains, said shoppers had shown more appetite for bargains and added that its winter sale had gone well.

That view was endorsed by fashion retailer Next as special reductions helped to keep its like-for-like sales figure in positive territory.

Chief executive Simon Wolfson blamed problems on the company's own ranges rather than any general slowdown and said he thought pessimism over consumer confidence had been overdone.

Amanda Large, retail analyst at brokers Gerrard, agreed.

She said: 'Consumer spending will still grow in the year, but at a more normal pace.' The BRC said retail sales in December rose 1.7 per cent on a like-for-like comparison and by 4.1 per cent on a total basis.

The three-month trend of growth fell from 3.1 per cent in November to 2.5 per cent in December on like-forlike sales, and from 6.1 per cent to 5.4 per cent for total sales.

Bill Moyes, director general, said Christmas sales figures were 'slightly disappointing'.

He said: 'Sales are growing but at a much slower rate than over the last two years. The trend is downwards. Consumers remain willing to spend but their pursuit of value means static prices and tight margins for retailers.' And he urged the Bank of England Monetary Policy Committee, which announces its latest interest rates decision today, to unveil a cut from the current four per cent.

Bridget Rosewell, chief economic adviser to the BRC, said: 'Consumers' willingness to shop has slowed significantly since the spring despite whatever has happened to house prices. It may yet be the case that the next move in interest rates should be down.'

Amanda Aldridge, head of retail for KPMG, said: 'These figures show that reports of a disastrous Christmas for the retail sector are grossly exaggerated.'
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Title Annotation:Business
Publication:The Birmingham Post (England)
Date:Jan 9, 2003
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