Clik here to view.
Retailers such as Home Retail Group, DFS and Co-op are feeling the pinch as shoppers get thrifty amid fears of job losses
The boss of electricals group Dixons said that government cuts were having a "chilling effect" on consumers as wilting high street demand for flatscreen TVs, sofas, jewellery and even takeaway pizzas pointed to deteriorating confidence.
John Browett said public sector workers were sitting on their hands as they waited to learn if they would keep their job. "There has been a bit of a pause in the market which we think is the result of the way people are reacting to the government cutbacks," he said. "At the moment many government employees are in consultation and this is having a chilling effect on expenditure on bigger items."
Like-for-like sales at its Currys and PC World stores in Britain and Ireland have tumbled 11% in the last 11 weeks and Browett said the weaker trading meant profits would come in £20m lower than analysts had expected at £85m.
To shore up the retailer, Dixons said it would embark on a fresh round of cost cutting with plans to slash £50m a year for the next three years. It is considering closing Spanish chain PC City, putting 1,200 jobs at risk. The shares closed down 18% at 13.69p.
The profit warning from Dixons weighed heavily on retail stocks with Kesa, which owns rival Comet, and Argos owner Home Retail Group were among the day's biggest fallers. Dixons joined others in reporting gloomy sales figures, with US listed jeweller Signet announcing weak trading at its H Samuel and Ernest Jones stores in the UK with sales down nearly 5% in the last seven weeks.
Even stock market darling Domino's Pizza was forced to admit that it was being dragged down by its Irish stores where like-for-likes dropped more than 10% in the first quarter. Domino's powered ahead during the recession, using buy-one-get-one-free deal such as "Two for Tuesday" to pull in customers opting for takeaways rather than eating out. The shares fell 11.43% to 395p.
Reporting its annual results, Peter Marks, chief executive of the Co-operative Group, said he did not expect things to get better until 2012, adding the "downturn is clearly biting deeper than we had expected". With annual sales of nearly £14bn the Co-op empire spans pharmacies, funeral services and financial products as well as groceries. Marks said people were "looking for value" across the board, "We now anticipate challenging trading conditions this year and into 2012."
The 2008 acquisition of Somerfield transformed the Co-op's food business into the UK's fifth largest supermarket chain and Marks said half the products in its aisles were on promotion – up from the usual 40% – as the competition with rivals intensified. "There is absolutely no growth in food volumes at all, so it is a very competitive environment," he said. Helped by a buying spree that included Somerfield and Britannia building society, profits were up nearly 50% at £545.7m, with the dividend pot shared among its members up 38% at £150.2m. Members earn a point for every pound spent and the group's success meant a point was worth 2p in 2010. Payouts are tied to your spending with the Co-op but a customer spending £10 a week on food and a £50,000 mortgage from its bank would receive a "divi" of £35.40. In a nod to the cuts and the "Big Society" agenda, Marks said the Co-op had been inundated by requests – even from the government itself – on how to form a mutual, so much so it is setting up a consultancy to provide formal advice.
Dixons chief Browett also suggested that the VAT rise in January was significant. Like-for-like sales were down 4% over the last 13 weeks, incorporating the two weeks before VAT went up, suggesting customers bought big-ticket items before the tax increase.
DFS, Britain's largest sofa retailer, said its growth had slowed in its second quarter even though the period included the post-Christmas sale which is normally its busiest time of the year. Ian Filby, chief executive, said: "Like many other retailers, we have seen a softening in demand since the beginning of 2011."
Figures out from the CBI suggested retail sales growth was up on a year ago in March, but remained subdued. The CBI's chief economic adviser Ian McCafferty said: "Sales growth picked up slightly for retailers compared with last month, but look beneath the surface and conditions remain tough on the high street. Even the best performing sectors – namely grocers and clothing – have seen volumes continue to fall."
The Dixons warning came after Thomas Cook said on Tuesday that UK demand for foreign holidays had dropped sharply and official figures showed the first fall in real household disposable income for 30 years.