Downbeat retail reports pull down FTSE

Another batch of downbeat reports from the retail sector ensured the FTSE 100 Index retreated further from a recent 30-month high today.

Investors reacted to claims that retailers had endured their worst Christmas for a decade – sending the Footsie 15 points lower to 4825.7 by mid-morning.

Supermarket group Morrisons and discount fashion chain Peacock became the latest retailers to disappoint with statements on seasonal trading.

Morrisons topped the list of Footsie fallers – down 4% or 9.5p to 206p – after reporting flat like-for-like sales at its core outlets over the festive period.

Outside the top flight, a profits warning from Peacock drove its shares down 11% or 29.5p to 242p, with the retailer bemoaning a poor pre-Christmas performance from its bonmarche chain.

The updates were released within hours of the British Retail Consortium announcing that high street sales in December were lower than 2003 on an underlying basis.

The BRC dubbed this Christmas “the worst for 10 years” and the outlook on the high street was clouded by uncertainty over the economy and the housing market.

Several other top flight retailers were dragged down, including Next, off 19p to 1584p, and Sainsbury’s, down 0.25p to 270p ahead of Thursday’s third-quarter results.

Topps Tiles was another faller in the lower tiers, off 9p to 250p after warning it may have trouble keeping up with its fast pace of like-for-like sales growth.

But discount retailer Matalan proved a haven for investment as it continued to reap the benefits of an overhaul in spite of difficult market conditions. Its shares were unchanged at 226p after an initial rise.

Elsewhere, Bovis Homes re-injected hope into the housebuilding sector following yesterday’s downbeat statement from rival Taylor Woodrow. Shares advanced 14p to 585p as it forecast record profits for 2004.