Tweet
Fears for a disastrous Christmas on the high street were growing last night after John Lewis reported another dismal week's trading.
The department store chain, which is regarded as a barometer for the health of the retail sector and for consumer confidence in middle England, reported sales for the seven days to Saturday night were down 13% on last year.
It was the tenth successive decline reported by the retailer and followed a 14% decline a week earlier, suggesting that the previous week's poor figures were not a blip, but that consumer spending has taken a further change for the worse.
The John Lewis figures emerged as one of its high street rivals was fighting for survival.
Last night the directors of Woolworths were still locked in emergency talks with its bankers in an attempt to prevent the 800-store group collapsing into administration. The 99-year old business employs 30,000 staff.
The grim state of the retail business was also underlined last week when Marks & Spencer held a one-day 20% sale in an attempt to lure in reluctant shoppers and shift unsold stock.
John Lewis said there were some signs that the Christmas shopping season had now begun, with sales in the seven days to Saturday November 22 up 11.3% on the previous week.
The director of the group's selling operations, Dan Knowles, said: "Inevitably, because of the current economic climate, sales are still down on last year".
He added: "It is a difficult Christmas and sales are down on last year but the lift for Christmas is happening. It is just not happening to the extent at which it happened last year."
He said the company sold £68m worth of products last week, about 7,000 items every minute, and had benefited from rivals holding sales and discount days because they bring in shoppers who might otherwise have stayed at home: "The competitors doing these sorts of stunts, it is quite good for us because we get more footfall on the high street."
Woolworths' directors want to sell its lossmaking stores to a restructuring specialist, Hilco, to save the other two groups in the Woolworths empire.
They are EUK - Britain's biggest distributor of entertainment items such as DVDs and CDs and an important supplier to chains such as Asda, Morrisons and Sainsbury's - and 2entertain, a venture with the BBC which makes and distributes BBC television programmes such as Top Gear and Life on Earth. Those two businesses are profitable, and made more than £40m before tax and interest last year.
Woolworths bosses intended to sell the retail chain to Hilco for £1 and Hilco would also take over £265m of the group's £385m of debt.
The two profitable businesses would then take over the rest of the debt - which they could afford to service. But the retailer's lenders objected, and have been threatening to put the entire business into administration in order to ensure recovery of their cash.
Over ther weekend Hilco offered to take on £300m of debt to get the deal through, and last night talks were continuing.
While a deal with Hilco might stop EUK and 2entertain going into administration, the outlook is still far from good for Woolworth's 25,000 store employees.
Hilco specialises in buying near-bust companies and often places them into administration with a plan to snap up the most profitable parts back from the administrators.
In either case, therefore, thousands of jobs are likely to be lost from a business which always has had its strongest weeks in the run-up to Christmas.
guardian.co.uk © Guardian News & Media Limited 2008 | Use of this content is subject to our Terms & Conditions | More Feeds
More...
