The abrupt fall in the number of people moving house and the decline in consumer confidence have dealt a double blow to tiles specialist Topps Tiles.
Like-for-like sales at the 320-store chain have plunged 18.3% in the past seven weeks. The sales update came as the retailer posted a 27% fall in profits and axed its dividend payout. Its shares lost 2.5p to 18.5p, their lowest level in a decade. Eighteen months ago they were changing hands at 300p.
"It is tough out there," said chief executive Matt Williams. "It has got worse. Sales patterns coincide with bad news and this year it has been unrelenting. We saw a step down in business earlier this year, when the housebuilders' problems emerged and another, more recently, when Lehmans collapsed."
House broker KBC Peel Hunt cut its profit forecast for the year to the end of September 2009 from £22m to £16m. Yesterday the company reported profits of £27.7m, down from £38m a year ago.
Axing the dividend will save £18m, and the saving will be used to reduce the group's £92m debt. Last year the company paid out 10.7p a share.
Williams said he expected the dire trading conditions to continue next year and does not expect much impact from the cut in VAT, announced by the chancellor in the pre-budget report, which takes effect on Monday. "Realistically I think it will make very little difference."
He added: "It will give us a bit more to invest in price, but we will not adopt a blanket approach and change every price. That would be a logistical nightmare."
Williams said the figures showed what a "resilient" business Topps Tiles is. "We are still profitable and cash generative," he said. Some £6m has been cut from costs. The retailer has pulled all its TV adverts - it had been advertising three times a day on ITV 1 - but redundancies have been limited to a handful of positions in head office and the retailer said it had no plans for more job cuts.
Store staff, however, have had their hours cut and some full-time staff have moved to part-time roles.
The results from Topps are the latest indication of the grim state of the high street. Other retailers due to produce updates in the coming days are also expected to report that trading has taken a fresh turn for the worse.
Fashion chain French Connection is expected to detail tough trading tomorrow, and on Thursday electricals retailer DSG, which operates Pc World and Currys, will reveal its first-half profits.
Last week analysts at Credit Suisse slashed its full-year profits forecast for DSG by more than 63% to £34m. Other analysts have suggested the group's profits might be wiped out entirely. DSG is also facing the withdrawal of credit insurance for its suppliers.
DIY group Kingfisher will also update the market with third-quarter figures. Yesterday, analyst Paul Smiddy at HSBC said "This week's results are likely to give further pause for thought about the length and depth of the recession, particularly in the UK."