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British fashion house Burberry Group PLC (BRBY.LN) said Tuesday it may sack up to 540 staff in Spain and the U.K., about 9% of its total workforce, as part of its latest cost-cutting plans to help ride out the economic downturn.

Burberry's latest round of cost cutting, which will deliver annual savings of between GBP30 million and GBP35 million from the next financial year, together with better-than-expected fiscal third-quarter sales and its reiteration of profit guidance, was well received by investors, who bid the retailer's shares sharply higher.

Kesa Electricals PLC (KESA.LN) Tuesday reported a better-than-expected third-quarter sales performance, thanks largely to strong post-Christmas trading at its U.K. electronics chain Comet, but said it expected tough market conditions to continue and underscored how tough trading conditions are for sellers of expensive, discretionary items.

That message was echoed Monday when DSG International PLC (DSGI.LN) said John Allan of Deutsche Post AG (DPW.XE) will take over as chairman, as Europe's biggest electrical goods retailer tries to turn itself around after a poor performance in 2008.

DSG is one of the U.K. retailers hurt by Christmas 2008. Another is Home Retail Group PLC (HOME.LN) which Thursday reported sales and margin declines and gave a gloomy outlook.

Automotive and leisure products retailer Halfords Group PLC (HFD.LN) also booked a decline in sales in its latest quarter but managed to improve margins despite steep discounting across the retail sector.

However, encouraging news was heard last week from catalogue and online home shopping retailer N Brown PLC (BWNG.LN), DVD, CD and video games chain HMV Group PLC (HMV.LN), baby and parenting-goods concern Mothercare PLC (MTC.LN) and from Associated British Foods PLC's (ABF.LN) discount clothing chain Primark, with all reporting good Yule Tide sales growth.

Europe's biggest independent mobile phone retailer Carphone Warehouse (CPW.LN), meanwhile, said it expects earnings next year to be flat and set out key strategic goals for the year to March 2010 in light of the weaker business conditions which it sees continuing.

Trading reports since the start of January show the U.K. retailers which did best during Christmas were supermarkets, discount retailers, niche and online players - as well as businesses that cater to young, financially unencumbered consumers.

As well as deteriorating trading conditions, retailers - particularly those that buy goods in Asia - face rising costs due to sterling's falling value versus the dollar. The bulk of the goods sold in Asia are pegged to the U.S. currency.

Online retailing seems to have fared well during the holidays though.

On Monday, ASOS PLC (ASC.LN) said its sales over the Christmas period more than doubled and the online fashion retailer also posted more than doubled sales for the 42 weeks ended Jan. 16.

Attention now moves William Morrison Supermarkets PLC (MRW.LN), which reports Thursday.

The U.K. retail holiday trading season kicked-off on Jan. 5 when both U.K. department store chain John Lewis and London department store Liberty PLC (LBE.LN) presented encouraging sales reports.

On Jan. 6, Next PLC (NXT.LN), Debenhams PLC (DEB.LN), New Look and The Co-operative reported better-than-expected Christmas sales performances. Good holiday sales were also reported by department store House of Fraser and fashion retailer Peacocks.

Marks & Spencer Group PLC (MKS.LN) the following day said it would close stores and cut jobs in reaction to falling sales and tightening margins over the key Christmas period. M&S' poor trading performance was put in to stark relief on Jan. 8 when rival J Sainsbury PLC (SBRY.LN) unveiled a better-than-expected 4.5% rise in same-store-sales, excluding fuel, for the fiscal-third quarter ended Jan. 3, underpinned by its best Christmas results to date.

Sainsbury's strong performance also made Tesco PLC's (TSCO.LN U.K. performance look limp. The country's biggest retailer had its worst U.K. Christmas sales performance since the early 1990s, hurt by its greater exposure to non-food lines like clothing and electricals than some of its supermarket rivals.

Tesco said U.K. same-store-sales, excluding fuel, rose a modest 2.5% for the seven weeks to Jan. 10 from a year earlier, bang in line with market expectations. But Tesco booked an impressive 33% jump in international sales, helped by favorable exchange rate movements in Europe, and a particularly strong performance in Asia. Group sales rose 12%.

Although Christmas 2008 was not the collapse many had feared it has seen a number of retailers go to the wall. They include U.K. sofa retailer Land of Leather PLC (LAN.LN), china and glass group Waterford Wedgwood PLC (WTFU.DB), Passion for Perfume Ltd., Adams Childrenswear Ltd., clothing chain USC, CD, DVD and video game retailer zavvi, coffee-and-tea purveyor Whittards of Chelsea, clothing chain the Officers Club, Woolworths Group PLC (WLW.LN) and furniture retailer MFI.

Other U.K. retailers scheduled to report trading performances in coming days include:

 
Thu, Jan. 22: William Morrison Supermarkets PLC (MRW.LN) 
 
Mon, Jan. 26: WH Smith PLC (SMWH.LN) AGM trading update 
 
Tue, Feb. 3:  Carpetright PLC trading update 
 

-By Lilly Vitorovich, Dow Jones Newswires; 44-0-207 842 9290; lilly.vitorovich@dowjones.com

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