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Negative trading statements hit three-year high

The number of negative trading statements from listed retailers at the end of last year is the highest in three years.

The number of retailers on the London Stock Exchange which issued negative trading statements in the fourth quarter of 2008 has reached a peak, and is at its highest level since the since the first quarter of 2005, according to research from Grant Thornton.

The restructuring firm’s Quoted Retail Companies Index found that 27% or retailers posted negative statements in Q4 of 2008, compared to 22% in Q4 of 2007.

However, the number of positive statements is at its highest, 31%, since the first quarter of last year, indicating that the most efficient retailers are riding out the storm and benefiting from the downturn affecting their competitors.

David Bush, head of Grant Thornton’s Retail Services team said: “This has been a particularly harrowing three months for retail trade with some large familiar brand names going into administration and most having to seriously discount their products merely to turn stock into cash.

“It is highly likely that the Christmas trading updates which will be released in the next few weeks will be extremely bleak with even the stronger retailers struggling for sales.”

Like-for-like sales figures showed a dramatic fall, with only 29% or all retailers showing an increase, compared to 65% in the fourth quarter of last year.

The number of retailers who issued profit warnings in the fourth quarter increased to five, all from the food, clothing or home sectors.

Bush said: “These results imply that the Christmas trading updates will be extremely gloomy with even the stronger retailers struggling for sales. Therefore, the retailers likely to succeed in 2009 will be those that hold onto market share without seriously damaging gross margins in the process whilst continuing to provide product to consumers which is underscored by perceived value.”

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