As a result of the senior management
changes made today, and therefore the potential for speculation ahead of the half-year
results announcement, the Board believes it appropriate to provide an update on
recent trading. The statement below indicates the current position of the UK Retail
division. The International and Financial Services divisions continue to perform
in line with expectations, and the half-year results will be published on 7 November.

UK Retail Trading Statement

UK Retail sales in the 24
weeks to 16 September were up 0.8% on last year.

A sales analysis is given
below, with the performance for the first 15 weeks announced at the time of
the AGM in July shown for comparison. Like-for-like sales are shown in brackets.

weeks to 16 September
weeks to 15 July
0.8% (-1.2%)
sales are estimated by comparing total sales with new and extended stores

* General sales have been
reduced by an estimated 1.2% (£21 million) as a result of last week’s
fuel dispute.

Compared to previous years,
we made deeper reductions at the start of the summer sale. This was effective
in clearing a higher volume of end of season stock, but the cost of reductions
was £23 million more than the comparative period last year. The changed
buying practices are delivering the expected benefits, but the higher reductions
offset the greater part of the buying benefits achieved in the first half.

There are other factors
affecting the net margin in the first half, which were not present in the comparable
period last year, and which will not recur in the second-half, specifically:

  • Additional marketing
    costs of an estimated £15 million due to the recent re-launch of the
    brand and the set-up expenses of the new marketing division.

  • The revenue costs of
    £13 million associated with 22 new concept stores (20 refurbished stores
    and 2 new stores), that will open in October and November. Sales in the three
    concept stores already opened (Sutton, Fosse Park and Kensington) are, in
    aggregate, 16% ahead of last year’s figures, since opening in the new format.

The full year results will
benefit from sales of the 22 new concept stores, the escalating benefits of
new buying policies, and the absence of the non-recurring costs listed above.