The retail sector’s festive reporting season began with a dramatic profits warning yesterday after DSG International, the electricals group, said consumers stayed away from its PC World stores in the run-up to Christmas. Financial Times, The Times, Daily Telegraph

Meanwhile, Next gave up on an ambition to return to underlying sales growth in 2008 because of a deteriorating consumer outlook – even though the clothing retailer shored up profits through tight control of costs.

Nervous consumers did eventually splash out on Champagne, said Majestic Wine, but the chain acknowledged that customers had left it late and said it was cautious for the year ahead.

Caution tinged with pessimism is the prevailing mood on the high street at the start of 2008, although analysts expect winners as well as losers when the Christmas trading tally is completed.

Game Group said on New Year’s Eve that its annual profits would be higher than expected after the pre-Christmas clamour for the Nintendo Wii and other video games consoles. Some internet-only stores such as Play.com appear to have outperformed their high-street rivals.