Newspaper article The Journal (Newcastle, England)

Retail Sector Conditions about to Be Highlighted; in Association with RBS Taking Stock

Newspaper article The Journal (Newcastle, England)

Retail Sector Conditions about to Be Highlighted; in Association with RBS Taking Stock

Article excerpt

Byline: Iain Laing

CONDITIONS in the retail sector will be tested this week when Tesco, Carphone Warehouse and Argos owner Home Retail Group post updates.

Supermarket giant Tesco will report on its efforts to tempt cash-strapped shoppers through the tills when it updates the market tomorrow.

Grocers have been cutting prices across the board in a bid to shore up flagging consumer spending.

Last month Tesco revealed it had put an extra 1,000 products on promotion, while Sainsbury's said the proportion of goods on special offer was 10% up year on year.

Morrisons said last week that it was marking down products across its entire range but added that first quarter sales were up 7%.

But while prices are falling on some lines, the cost of staple goods such as milk, cheese and bread has been soaring and it is unclear how much of the group's sales rise is down to inflation.

Tesco insists prices are lower than average but has also admitted that inflation across its stores had risen despite falls in non-food price tags.

Experts have estimated that food inflation is now some 6.6%, which when added to the rocketing cost of petrol and energy is putting consumers under pressure.

The recent falls in house prices have added to the gloom for many households and consumer confidence is now at a near 18-year low.

Analysts at Shore Capital Stockbrokers said as a discount-oriented chain, Tesco is positioned to compete well.

They are expecting a solid trading update from the group and said like-for-like sales growth of 3% would be a healthy performance from the group.

Carphone Warehouse's full-year results on Thursday may offer few surprises after a detailed trading update, but analysts will be hoping for more details of its pounds 1.1bn tie-up with US giant Best Buy announced last month.

The mobile phone retailer and Talk- Talk operator is to spin off its 2,400-strong retail store network into a joint venture with Best Buy, with aims to open stores selling electronic goods from TVs to PCs and laptops throughout the UK and Europe. …

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