Electrical goods company DSG, which trades in Ireland as Currys and PC World, said trading conditions had got worse and cut its investment plans today, but it eased concerns about its bank loans, giving some relief to its battered shares.
"Assuming the banking system is actually underpinned and we don't get a complete collapse... we don't see any issues with banking covenants," chief executive John Browett told analysts on a conference call.
"We're preparing for a poor Christmas, but we don't think it's going to be completely disastrous either," he told reporters earlier.
Shares in DSG, whose store chains include Currys and PC World in Britain, Elkjop in the Nordic region and UniEuro in Italy, have plunged almost 90 per cent over the past two years, hit by a downturn in consumer spending and worries over US rival Best Buy's entry into Europe next year.
The decline has accelerated in recent weeks on fears the firm might breach the terms of its bank loans.
This morning, DSG shares were up 10.6 per cent at 26.25 pence after trading as high as 28 pence.
"There's relief it's not worse ... The bad news was already in the price," said Pali International analyst Nick Bubb, noting that house brokers Citi and Cazenove had cut their profit forecasts ahead of the trading update.
DSG, which runs 1,200 shops and online stores in 28 countries, said sales at stores open at least a year fell 7 per cent in the 24 weeks to October 18th, in line with the decline reported after 16 weeks.
Gross profit margins were down 70 basis points.
JP Morgan analysts said the comparable figures for the last eight weeks of the period were 4 per cent easier, and so trading had clearly got tougher.
"Consumer confidence has significantly deteriorated across Europe," DSG said in its statement.
Mr Browett said sales of large items of discretionary spending, like flat panel TVs, had particularly suffered.
Shoppers across Europe were already cutting back amid higher food and fuel costs and this has been superseded by the prospect of global recession.
Research group Verdict forecast today that spending on non-food items in Britain would fall in the run-up to Christmas for the first time in more than a decade.
Reuters