Sharpen up, FSA warns retailers

THE City's top watchdog has warned High Street retailers that they must alert investors as soon as they become aware of any changes in trading conditions, Financial Mail has learned.

The Financial Services Authority has also asked some retailers to justify the wording of statements made ahead of Christmas trading announcements.

The news comes after shareholders attacked WH Smith for taking 18 days to confirm a Financial Mail report that revealed its profits would be 'materially' below expectations after distribution problems left many shelves empty.

This is likely to be one of the issues raised at this week's annual meeting, when WH Smith also faces a shareholder revolt over the £2.6 million 'golden hello' given to new chief executive Kate Swann and the £330,000 pay-off for Beverley Hodson, who was sacked as retail director earlier this month.

One City banker said: 'I know of one case where a company was asked to justify two words in a trading statement. It was able to do so, but it is a sign that the FSA is toughening its act.'

The regulator focused its attention on the High Street after anecdotal evidence last autumn suggested dismal Christmas trading. That prompted analysts to predict that the January sales would start early.

It is believed that the FSA is reviewing statements made by retailers during this period to make sure that they did not mislead shareholders on trading prospects.

The regulator reminded football clubs last year of their duties towards investors after a flurry of transfer deals were revealed in the sports pages, rather than announced to the Stock Exchange. Fans of Barcelona, for example, learned that the Catalan football club was in talks to buy David Beckham before the shareholders of his club, publicly quoted Manchester United.

A spokesman for the FSA said: 'We are reminding retailers of the listing rules as part of our pro-active approach towards regulation.'

The regulator has reminded retailers that listing rules require them to tell the Stock Exchange of any changes in performance or expectations as soon as they become apparent.

'We have told retailers that shareholders should be informed sooner rather than later,' the spokesman added.