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Last Updated: Wednesday, 16 January 2008, 23:03 GMT
Sales decline knocks Woolworths
Woolworths store
Woolworths said Christmas trading was "very challenging"
Shares in Woolworths have fallen 11% after it reported a drop in sales amid lacklustre consumer confidence and tough competition.

The firm said like-for-like sales at its retail business fell 3.2% in the 49 weeks to 12 January.

Woolworths said the drop was down to lower sales of electrical goods such as flat screen televisions and PCs amid "fierce discounting" in the sector.

It added that the Christmas trading period had been "very challenging".

Woolworths shares closed down 8.2p, 1.8% at 17.7p.

"Woolworths has unfortunately done little to alleviate the current High Street gloom," said Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers.

Profit forecast

The share price slide comes despite the chain forecasting a return to profit for its retail arm.

"We continue to be concerned about the underlying level of consumer confidence during 2008," said Trevor Bish-Jones, Woolworths' chief executive.

"However, in spite of volatile and highly competitive markets, all parts of the business took steps forward."

Cost cutting and better margins would help Woolworths' retail business make a modest profit in the current financial year after a loss the previous year, the firm said.

Group sales, which include Woolworths' Entertainment Wholesale business, rose by 11.2%.

Woolworths operates 800 High Street shops but relies on the supply of DVDs, CDs and video games to third parties for a large part of its group profits.

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