Electricals retailer Dixons sounded a cautious note about its prospects after sales from its UK businesses went into reverse.
Dixons said yesterday its high street chains had suffered contrasting fortunes during a "very challenging" trading period as it reported a two per cent fall in UK samestore sales in the 24 weeks to April 30.
This meant growth in the UK slowed to only two per cent across the full year after accelerating six per cent on a like-for-like basis in the first half, but Dixons said its annual results should still meet market expectations.
Trading toughened most visibly at mobile phone chain The Link where the group cut prices on prepay offers and experienced a drop in demand for contract deals.
The figures came just days after the British Retail Consortium said retail sales fell to their lowest level for ten years last month, and Dixons' comments on a tough trading environment echo the experience of rival retailers such as clothing chain Matalan and B&Q owner Kingfisher.
Dixons said: "Sales at The Link fell nine per cent over the past six months, although a stronger first half meant the group progressed like-for-like sales at the chain by two per cent over the full year."
Price deflation at its PC World stores ensured the computer retailer lost further ground in sales, falling eight per cent in the second half to stand two per cent lower over the whole year.
In contrast, the group said its Currys and Dixons chains performed well on the back of demand for products such as flat panel TVs and laptop computers.
Currys produced like-forlike sales growth of two per cent in the second half and the figure for Dixons was up five per cent, although both chains experienced a slowdown after Christmas.
Chief executive John Clare said the group had taken action to counter the drop in consumer spending by focusing on margins, costs and service.
He said: "We are cautious about the prospects for our markets over the next twelve months.
"Price deflation continues to be a factor, which, combined with cost inflation and a cautious UK consumer, means that the environment will be very challenging." As well as the four UK chains, Dixons Group has retail businesses in a number of other European countries, including Ireland, Italy and France.
It recently signalled a major expansion abroad after signing a deal that could herald a £1 billion takeover of Russia's leading electronics firm Eldorado.
With its international businesses contributing one-third of sales for the first time, group revenues from continuing operations rose by two per cent over the full year.