Sales rescue retailers' Christmas

THE HIGH Street faced more woe today after retailers admitted they were forced to slash prices to rescue Christmas sales. The CBI said UK retail sales surged unexpectedly in December and at their fastest pace in six months, but only after shops launched early sales to generate business.

The organisation said discounting played a greater role than usual for Christmas and will be reflected in subdued profitability for retailers. Marks & Spencer, Allders and Debenhams launched massive sale promotions in the run up to Christmas, holding several 50% off days.

Retail giants Next, Woolworths and House of Fraser have all reported disappointing Christmas figures.

Shops are also bracing themselves for a subdued January, with many reporting that volumes for they key January sales period were only average.

CBI chief economist Ian McCafferty said: 'Many retailers were concerned by the slow start to Christmas. But in the event they encouraged cautious consumers into the shops.

'However if, as is likely, widespread discounting drove December's increase in sales volume, then value and profitability will have remained subdued.'

Overall, 53% of retailers reported increased sales on 2003, with 20% signalling falls, giving a balance of plus 33. The balance was well above the plus 15 analysts had forecast and the plus 9 that retailers had expected in November.

Retail sectors reporting the strongest annual growth in December were specialist food stores, chemists, furniture and carpet shops.

Credit and debit card company Mastercard and Maestro reported poor sales figures over the Christmas period, while the British Retail Consortium is expected to report that shops experienced, on average, a 2% fall in like-for-like sales in December compared with 2003.