LONDON REPORT:Retailers are counting the cost of arctic conditions – and the City has noticed, writes FIONA WALSH

ESTIMATES OF how big a hit the British High Street will take from the arctic weather conditions in the run-up to Christmas have now reached £1 billion – and climbing.

With just three days left to recoup lost business after a disastrous weekend, shares in the stores sector suffered another dismal session yesterday as it looks increasingly unlikely that the lost ground will be made up.

The mood was not helped by a profits warning from fashion retailer Alexon, which takes in the Eastex, Ann Harvey and Kaliko brands and caters largely for well-heeled seniors.

Older shoppers may have the spending power these days, but that’s not much use if they can’t get out to use it.

In the past four weeks the weather has forced Alexon to close between 40 and 60 of its outlets for several days at a time, the group said. And, even where its stores stayed open, its elderly customers were often unable to venture out.

As Alexon chief executive Jane McNally explained, many of its customers, particularly for its Eastex brand, are retired. “They have listened to the travel reports and stayed at home. They probably won’t be going out to the shops until after Christmas, assuming there has been a thaw by then,” she added.

All that adds up to a dramatic 20 per cent plunge in like-for-like sales at the group in the weeks from November 23rd to last Saturday, a loss of trade that will wipe out more than half the profit Alexon had been hoping to make for the whole year.

The grim news was accompanied by a warning from directors that the group is now in danger of violating one of its debt covenants. Alexon shares tumbled 20 per cent to 12.25p, taking their loss for the year to almost 70 per cent.

Shares in the rest of the sector were also moving south as analysts attempted to assess the impact of the appalling weather, not just on footfall but also on the all-important supply chain. There are still hopes that the High Street will see something resembling the traditional last-minute shopping frenzy – weather permitting – but many retailers are struggling to keep the shelves stocked because of the disruption to deliveries.

Among the biggest fallers this week have been Dixons Retail, Game Group, Home Retail (which owns Argos) and HMV, which had already been battered earlier in the month after it reported an accelerating sales decline and escalating first-half losses. But major retailers such as Marks Spencer, Next and Kingfisher have also been losing ground amid growing fears for the future of a sector that is already facing major challenges, from the VAT hike in the new year to rising cotton prices.

And that is on top of the dismal economic backdrop, which continues to take its toll on consumer confidence. A new survey this week underlined the dismal mood. The GsK NOP index showed that although confidence levels are roughly unchanged on a year ago, people are increasingly concerned about 2011 and confidence in their own personal circumstances is falling.

It’s not all gloom – Nick Bubb, veteran retail analyst at Arden Partners, is taking “Snowmaggedon” in his stride, and is convinced that the pent-up demand of consumers will be released in the January sales. However, he believes a key feature of the Christmas trading updates that will be released in their usual torrent in the first few weeks of the new year will show an increasing polarisation in performance between the different retailers; in other words, a widening gap between the winners and the losers.

And there will be winners this year, despite the weather. The retail team at Seymour Pierce is tipping the likely winners as Burberry, WH Smith and the food retailers in general: Burberry because it is predominantly an international retailer, and Smiths because it is likely to have picked up some extra High Street trade from those shoppers who were unable to make it to the out-of-town malls.

The food retailers should do well as their sales are largely made in the final few days before Christmas Day, which were also affected by snow last year, making comparisons easier. They may also have won some extra trade in non-food lines from the disappointed out-of-town shoppers.

And the losers? According to Seymour Pierce, there’ll be quite a few of these this year, from Alexon (obviously) to HMV, Game Group, the sports chain JJB, Halfords, Mothercare and Kesa’s Comet – all of which were struggling before the snow hit. We’ll know the worst in a few weeks’ time.

Fiona Walsh writes for the Guardiannewspaper in London