Retailers in crisis as big freeze hits profits

By ADRIAN LOWERY
Updated: 05:06 EST, 6 January 2011

Major names on the UK high street have been left in crisis after the big freeze decimated festive sales, it emerged today.

Mothercare and Clinton Cards today warned shareholders that their profits would be well below expectation this year, with both blaming the severe winter weather.

The profit warnings come hard on the heels of news from HMV that it is shutting 60 shops in a battle to survive, as it blamed the bad weather for a 10% fall in festive sales and a another profit-warning.

Earlier this week, Next said the December snow had cost it £22m in Christmas sales, but that profits remained on target.

Mothercare said the frozen roads had prevented shoppers reaching its out-of-town stores, and said toy sales were particularly affected as December's Arctic blast wiped an estimated 4% off its UK sales figure for the final quarter of 2010.

The mother and baby products retailer, which has 377 UK stores, said like-for-like sales excluding VAT were down 5.8% in the 12 weeks to January 1, which led the retailer to warn that profits for the year to April would fall short of the City's expected £41m.

Finance director Neil Harrington told Reuters he expected house brokers JPMorgan Cazenove and Numis to cut 2010-11 profit forecasts by 10-15%.

Shares were down 5% or 28.5p to 569p.

Clinton Cards meanwhile said like-for-like sales dropped 2% in its Clinton Cards shops in the five weeks to January 2, while its Birthdays brand saw a 1.5% fall.

The shortfall, which will hit annual results for the year to July 31, adds to the pressure on the chain after its profits slumped from £24m in 2008 to £13m in its last financial year.

The Money Blog: HMV and a lesson in the art of losing money

The recent downturn in fortunes has prompted the company to unveil plans to update 'the look and feel' of its Clinton stores, including a new logo, revamped shop fronts and redesigned uniforms.

Shares in the retailer were hammered 16%, or 4.5p to 23.5p.

Additionally, McBride, Europe's biggest maker of own-brand cleaning products, said it struggled in December. It said full-year profits could be towards the lower end of expectations.

Investec analyst Nicola Mallard cut her profit forecasts for fiscal 2011 and 2012 by £3m to £35m and £40m respectively, warning branded manufacturers might respond to a sluggish retail environment by cutting prices.

Shares in McBride were down 7% at 170.9p.

There was some evidence, however, that British shoppers took solace in drink as the cold weather bit. Wine warehouse chain Majestic Wine posted a 3.7% rise in underlying sales in the nine weeks to January 3.