DSG and M&S likely Christmas turkeys

By James Davey - Analysis

LONDON (Reuters) - Two of the biggest names on high street, DSG and Marks & Spencer, are tipped to be among the most vulnerable retailers this Christmas as stores begin the battle for the consumer purse.

Profits have already been unravelling, with the pair losing out to rivals as the economic downturn deepens. And it is likely to be too late now to influence that trend to any great extent in time for the crucial Christmas trading period.

At the end of a woeful year for the sector, which has seen the FTSE All Share General Retailers Index fall 55 percent, shops have already succumbed to early discounting.

M&S, Britain's largest clothing retailer, held a "20 percent off" sale on Thursday, its first pre-Christmas clearance for four years. This was seen as a response to Debenhams' three-day "Christmas Shopping Spectacular," offering 50 percent reductions on some lines, which kicked-off on Wednesday.

Philip Green's Wallis, Dorothy Perkins, Evans, and Burton stores have also launched sales with discounts of 20 percent.

"The retail sector usually faces a testing and nervous time trying to gauge the temperature of consumer demand in the run-up to Christmas. But it faces exceptional uncertainty this year," said Jeremy Rance, director retail and wholesale at Barclays Commercial Bank.

Official data on Thursday showed the volume of British retail sales in the three months to October was 2.2 percent higher than the same period a year ago -- the slowest growth in retail sales since April 2006.

DSG, Europe's second-largest electricals retailer and the owner of Currys and PC World in Britain, has had a dreadful year as consumers have reduced spend on big ticket items amid increased utility bills, rising unemployment, plunging house prices and tighter credit conditions.