French Connection has issued a profit warning on the back of poor sales in August and October, sparking fears that Christmas may not come for fashion retailers this year.
The fashion brand said that for the first 14 weeks of the second half, like-for-like sales at its UK and European retail division fell by 3%. It said that unless trading picked up on the high street profit could fall below last year's £4 million. Analysts had forecast the brand would rake in between £5m and £7.5m this year.
The company said in a statement: "While we expect to report a profit for the year, our ability to achieve the same level as last year depends on an improvement in general retail environment in the UK over the next three months."
French Connection is the first fashion retailer to issue a profit warning in the run up to Christmas this year. It will make painful reading for other retailers who are crossing their fingers for a sales surge in the crucial December trading period.
However French Connection said that despite a "volatile period", sales of womenswear continued to grow in like-for-like terms and added that its Toast chain was also now showing improvement.
Wholesale business in the UK and Europe fell back on a like-for-like basis but French Connection said that forward orders for spring 08 were ahead of last year.