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Retailers ramp up discounts to halt slowing Sale performance

Retailers are ramping up discounts to as much as 90% to clear stock and stop the post-Christmas Sales rush collapsing.

Debenhams, the department store chain, which has been on Sale since Boxing day with price cuts of up to 50%, launched a Blue Cross Sale today, with up to 70% off some products.

In the sportswear sector JJB Sports has ramped up its discounts to 90% in a bid to clear last year’s stock.

Retailers are facing a white-knuckle January after post-Christmas footfall collapsed, threatening their already heavily depleted margins further.

Boxing Day and December 27, which traditionally kick off the post-Christmas Sale period, were exceptionally busy, with bargain hunters tempted to the shops by discounts of up to 70%.

However, the boost to high street tills appears to have been short-lived. Several retailers told Drapers that sales came to a virtual standstill last weekend, adding that newspaper reports saying consumers were back out shopping were misleading.

The chief executive of one high street chain warned that retailers may have to discount beyond 50% to encourage shoppers to keep returning. He said: “What was in the papers was a load of crap. It was inevitable that Boxing Day would be the ‘best ever’, we have opened loads more space and every year we all open more and more of our stores on December 26.

“The Sale started reasonably, but the Saturday after Christmas was awful. It is crucial that trade picks up this week to make the Sale good against last year. The key will be how much margin we have to sacrifice.”

The director of one value chain agreed that Sale spending was already slowing. He said: “People will continue to spend until the weekend, but retailers face a tough couple of weeks until mid-January. We’ve had a strong Sale, with Boxing Day and New Year’s Eve very busy, but last weekend was quiet. There’s a lot of doom and gloom about for 2008.”

Another young fashion boss said: “It has been one of the worst womenswear seasons I can ever remember, but so far we’ve kept up Sale momentum.”

Department stores, traditionally the winners in the Boxing Day Sales, were more confident. Premium chains also fared well, benefiting from bargain hunters trading up during the Sale.

Like-for-like sales at Selfridges grew 9% in December. Chief executive Paul Kelly said: “Every store has grown ahead of 2006. We started our Sale on Boxing Day, with less stock to mark down than ever before. It has cleared well and new-season merchandise is selling fast.”

But independent retailers were cautious in the face of a feared economic downturn. Louis Copeland, owner of Dublin-based tailoring business Louis Copeland, said: “Before Christmas it was a bit slow, but the Sale has been OK and we’re on target. Ireland has had it so good for the past 10 years, but there’s a lot of talk about an economic slowdown. We have to be careful that we don’t talk ourselves into it.”

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