Retail concerns drag Footsie down

A clutch of retailers led the FTSE 100 Index to a negative close today amid fresh concern over the outlook for the high street.

Argos group GUS said consumer spending had slowed in recent months, while sentiment was not helped by a warning from second-tier firm Kesa Electricals that its Comet chain would drop into the red in its first half.

The news sent a shiver through the retail sector, leaving clothing chain Next, supermarket giant Sainsbury’s and GUS the top three fallers on a day when the FTSE 100 Index eased 11 points to 4971.5.

A continued sell-off on Wall Street added to the gloom, with the Dow Jones Industrial Average losing around 50 points by the end of trading in London.

However, economic data in the UK offered some support with official figures for GDP in the first-quarter revised downwards to 0.5%, prompting some analysts to talk of a stronger case for a cut in interest rates.

GUS lost 27.5p to 859p after dashing hopes that it would immediately spin off its Experian credit checking business. Although separating Experian from its retail arm remained its long-term intention, GUS said its current plan was to demerge its 66% stake in luxury goods group Burberry instead.

This, together with its comments on consumer spending, overshadowed news that profits rose 10% to £910 million in its last financial year.

It was beaten to the top of the fallers board by Next which was down 3% or 50p to 1450p and Sainsbury’s which lost 9.5p to 283p.

Elsewhere in the retail sector, shares in Kesa faded 9p to 265.5p.

British Land was doing its best to pull the Footsie higher – up 17p to 882p - after it posted an 8% hike in profits and predicted a bright future for out-of-town retail parks.

Outside the top flight, Caffe Nero cheered 6% or 12p to 201.5p after saying that unlike many other high street operators, it had experienced buoyant levels of trading in 2005 and annual profits would “materially” beat profit expectations.

Bars and nightclubs operator Luminar was also in the black – up 12p to 492p - as it said a number of potential suitors had shown interest in snapping up its Chicago Rock Cafe and Jumpin’ Jaks chains.

Investors bought into De La Rue after the bank note printer promised to pay out £70 million in special dividends, with its shares lifting 5.75p to 385.75p.

But troubled car rental firm Avis Europe saw its shares fall nearly 8% or 5.5p to 65.75p as it warned difficult trading conditions had continued into its new financial year.

Dairy Crest lost 2p to 470p after saying the loss of milk contracts with Asda and Tesco would continue to hurt it in 2005/2006.

The highest Footsie risers today were Daily Mail & General Trust up 14.5p to 679.5p, British Land adding 17p to 882p, Old Mutual up 2p to 119p and Rentokil adding 2.5p to 156.25p.

The heaviest fallers were Next down 50p to 1450p, Sainsbury’s off 9.5p to 283p, GUS down 27.5p to 859p and BHP Billiton off 14p to 638p.