Austin Reed issues profit warning

Austin Reed is pinning its hopes on better Christmas sales

Clothing retailer Austin Reed has warned of a "significant" drop in profits despite the recent overhaul of its flagship London store.

The UK firm said trading conditions had deteriorated since it unveiled a 59% drop in half-year profits in October.

Austin Reed said its like-for-like sales had dropped 11.7% in the 15 weeks to 22 November.

The fall was largely brought about by disruption caused during the revamp of its Regent Street store, the firm said.

Christmas wishes

The company also blamed the impact of war in Iraq and the Sars virus for its declining fortunes.

Austin Reed said much now hinged on its peak Christmas and New Year trading period in December and January.

However, the company warned that it was "unlikely that the recent sales decline will be reversed in the remainder of the financial year".

It said it now expected pre-tax profit before exceptionals for the year to 31 January to be "significantly lower than market expectations".

By early afternoon Thursday, Austin Reed's share price was down 14 points or 9.4% to 135, against Wednesday's 149 close.