B&Q and Moss Bros feel high street chill

DIY chain B&Q and menswear business Moss Bros (LSE: MOSB.L - news) have become the latest victims of tough conditions on the high street after they revealed consumer caution was hurting sales.

Kingfisher (Frankfurt: 812861 - news) , owner of B&Q, warned the UK outlook was "uncertain" as it reported declining demand at the chain for big ticket items such as kitchens - sending shares 9% lower.

Moss Bros was punished even more severely by investors, as a profit warning blamed on supply issues, poor hire sales and lower store visits resulted in a 22% slump.

Elsewhere in the beleaguered retail sector, Carpetright (Other OTC: CGHXF - news) unveiled a rescue proposal involving store closures and rent reductions that is thought likely to put at risk around a quarter of its 400 shops.

Meanwhile, Mothercare (Other OTC: MHCRF - news) said it was looking to secure additional funding.

There was further grim news for collapsed chain Toys R Us - which is already winding down all 100 stores with the loss of 3,000 jobs - as administrators said it was closing its distribution centre in Coventry resulting in 98 redundancies.

Retailers have been struggling as the pound's collapse since the Brexit vote has helped drive up inflation, squeezing consumer spending power since wage growth is struggling to keep pace.

Official figures this week have suggested the gap is narrowing as pay increases improve and inflation slows.

But it has come too late to save some of the high street's biggest names from suffering difficult trading over the winter months - with some only now revealing the extent of the damage.

Kingfisher reported a 10% fall in profits to £682m for the year to the end of January, with earnings hit by weak sales at its Castorama and Brico Depot brands in France as well as shake-up costs.

B&Q like-for-like sales were down 2.8% with performance deteriorating in the final quarter when there was a 5.1% decline.

Kingfisher said it reflected "softer demand for big ticket categories" such as kitchens.

B&Q is in the midst of an overhaul which has seen it shut 65 shops and slash 3,000 jobs over the last two years. It currently has just under 300 stores in the UK and Ireland (Other OTC: IRLD - news) .

Screwfix, another Kingfisher-owned chain, has done better and saw sales grow strongly over the year though it was also hampered by a tough fourth quarter.

Moss Bros, which has 129 stores across the UK, said its profits for the year to next January would be "materially lower" than current expectations.

It said a "consolidation" of its supplier base - in response to higher costs prompted by the pound's weakness - had resulted in a stock shortfall.

The group added that a decline in store footfall in December - which had prompted an earlier profit warning - had continued into the new year "reflecting a more cautious consumer environment".

Chief (Taiwan OTC: 3345.TWO - news) executive Brian Brick said: "In common with many UK retailers, the year ahead looks like being a very challenging one."