Disappointing Christmas sales at the High Street electronics chain Dixons have confirmed fears about a slowdown in customer spending.

The electronics retailer dealt a second blow by warning that the poor performance would dent its profits.

HIGH STREET GLOOM

The mood of the consumer is beginning to change and change quite quickly John Clare Dixons chief executive

Read more about Dixons' woes

Dixons was one of the first well known companies to give details of Christmas spending, and some analysts see the poor figures as an early indication of a slowdown on the High Street.

Figures released by the British Retail Consortium (BRC) also suggested the consumer boom was easing, with underlying sales growing at their slowest annual rate for more than two years.

A dip in consumer spending presents could present a threat to the UK economy, which to date has been driven by growth in the service sector.

There was mixed news from other retailers.

Laura Ashley said that its profits would be substantially lower because sales of both clothing and home furnishing were lower than expected.

But the Next fashion chain saw a better than expected increase in sales.

Tight purse strings

More retailers will provide trading updates during the next few days and weeks - and new figures will be closely monitored to determine whether Dixon's poor trading is indicative of trend.

HIGH STREET GLOOM

The current retail market backdrop makes forecasting unusually difficult Laura Ashley statement

Read more about Laura Ashley

The company's chief executive John Clare was adamant that the blip was through no fault of Dixons.

He told BBC News 24 it was "not anything we were doing wrong" but more a sign of weaker consumer spending habits.

Yaron Meshoulam, an analyst at the 20/20 retail consultancy, added: "People have been listening to the Chancellor and realising things are not going to continue on the boom side and so are pulling back."

But Richard Ratner, retail analyst at Seymour Pierce, told BBC News Online that the fall in sales was "Dixons specific".

HIGH STREET GLOOM

We know we have made mistakes with our ranges and we have worked very hard to put them right Simon Wolfson Next chief executive

Read more about Next's recovery

"I think they lost out to Argos," said Mr Ratner.

He admitted that retail sales "appear to be slowing a bit", but said: "I think you'll find it's been very good post-Christmas."

Dixons said sales rose just 1% in the eight weeks to 4 January.

In the same trading update, the company noted that comparable sales had increased by 5% in the six months to 9 November.

Investors took the news badly and pushed Dixons' shares down 21% to 116.5 pence.

Budget prices

Next did not release separate Christmas and New Year trading figures, but said sales had increased by 1.7% in the six months to 4 January compared with 9% the previous year.

KEEP PERSPECTIVE

There is good reason to believe the retail sector will continue to at least maintain its share of consumer expenditure Simon Procter, Charles Stanley

Even though the increase in sales at Next was fairly low, it was taken as good news because the rise was higher than expected and the company had been struggling.

But if the summer and New Year sales were excluded, sales fell by 0.8%.

"We are definitely not proud of the minus 0.8%. We had not planned for that at all," said chief executive Simon Wolfson.

Another retailer, the budget chain Peacocks, saw a 3% rise in sales over Christmas and New Year.

Late rush

The BRC said the value of underlying sales on the High Street rose by 1.7% in December compared with a year earlier, the slowest growth rate since October 2000. Total sales grew by 4.1%.

"Overall, the Christmas sales figures were slightly disappointing," said BRC director general Bill Moyles.

The BRC noted that while sales were slow in the run-up to Christmas, they picked up in the final week of December.

"The midweek timing of Christmas Day gave shoppers an extra day to buy presents, which was partly responsible for the late rush," the BRC said.

Retailers not alone

Simon Proctor, retail analyst at Charles Stanley, told BBC News Online that retailers could not be singled out.

"Retail is like any other consumer industry, and is going to find it tough in the next six months."

But Mr Proctor said investors must look at "the bigger picture".

"There is good reason to believe the retail sector will continue to at least maintain its share of consumer expenditure."