UK retailers say talk of economic recovery premature

Wm Morrisons reports 10 per cent drop in first-half profits

Some of Britain’s biggest retailers yesterday cast doubt over signs of economic recovery, saying consumer spending was likely to remain subdued until wages rise ahead of inflation, which could be over a year away.

Wm Morrisons, the number four grocer, reported a 10 per cent drop in first-half profits, hit by its late entry into fast-growing online and convenience store markets.

Number two clothing retailer Next posted an 8.2 per cent increase in first-half profit but was reliant on a strong performance from its Directory internet business to offset sales falls in traditional stores.

Also yesterday, Home Retail posted weather-assisted second-quarter underlying sales rises of 2.7 per cent and 11 per cent at its Argos and Homebase businesses respectively, but was still cautious. – (Reuters)