Kingfisher casts gloom over sales prospects for Christmas

Christmas is looking like a miserable one for Britain's retailers. Shares in Kingfisher and Dixons slumped yesterday as Kingfisher warned of stiff competition in the Christmas holiday period and reported a slowdown of sales growth at Comet, its electrical goods chain. The warning follows monthly figures from the British Retail Consortium on Tuesday which showed a sharp slowdown in November sales.

Sir Geoffrey Mulcahy, Kingfisher chief executive, warned: "Our fourth- quarter performance will be crucial and Christmas trading is proving more competitive than ever." The comments came as Kingfisher announced a healthy 7.8 per cent like-for-like sales growth in the third quarter to 1 November across its businesses, but a slowdown in like-for-like sales at Comet. Kingfisher's Comet, Woolworth and Superdrug chains are the chief beneficiaries of Christmas spending. A spokesman for the company said pressure was growing from customers for value for money. "It's getting tougher and tougher to attract customers," said the company.

The BRC survey showed the value of retail sales in November grew just 1.1 per cent compared to a 4.9 per cent growth in November 1996 and warned that retailers faced a "white-knuckle ride" at Christmas. The Office of National Statistics has also pointed to a marked slowdown of retail price inflation in November.

Richard Hyman from Verdict, the retail consultants, said that part of the reason for the weak figures for November was a spending boom in the comparative period last year, helped by the cold weather. This year demand has been held back by early spending of windfall gains, the death of Diana, Princess of Wales, and rising interest rates.