Major shops hit by credit crunch

MAJOR high street stores are feeling the impact of the credit crunch, figures show today.

Takings have plummeted by "double digits" over the past fortnight as consumers saw the banking crisis unfold. The rise in the jobless total is likely to deepen problems for retailers as the crucial Christmas period approaches, City analysts warn.

John Lewis today revealed a huge drop in revenues at all its London department stores in the week up to 11 October. During that time there were record falls on the stock market, a £500 billion bank-bail out and the collapse of Icelandic-owned savings bank Icesave.

Other major high street chains, including Marks & Spencer, are said to have suffered a torrid month, particularly in London and the South-East. There is also growing evidence that the luxury sector which had appeared to be immune from the slowdown is starting to suffer too. According to John Lewis, sales at Peter Jones, the Chelsea department store favoured by City bankers, were down almost 15 per cent on the same week last year. The Bluewater John Lewis took a 12.9 per cent hit, Brent Cross was 13.4 per cent lower and Kingston fell 11 per cent.

Even the Oxford Street flagship store, which has been refurbished and performing very strongly this year, was three per cent down on last year. Leading London stores face a new challenge from the end of the month when the capital's biggest shopping centre, Westfield London, opens in Shepherd's Bush. A report today from analysts Experian said shops in Hammersmith, Kensington and the West End would be particularly hard hit by the new competition equivalent to one and a half Brent Cross-sized malls opening on their doorstep.

A succession of high street chains have warned in recent weeks that profits will be down, including the owner of DIY chain Wickes, sports retailer JJB Sports and electrical group DSG, owners of Currys and Dixons.

Nick Bubb, retail analyst at brokers Pali International, said: "The next week is a key one when the graph really needs to start to climb towards Christmas. If they don't start beating last year's comparable figures we could be looking at Armageddon. People will still buy presents at Christmas but there is a danger they will spend five to 10 per cent less than last year. That is extremely bad news for companies like Debenhams, given all their debt."

The John Lewis figures alarmed the City because it is seen as a barometer of the high street as a whole. In a statement it said: "Last week started with great promise ... but as the financial news worsened and the sun started to shine so did our trade start to fall away."