The founder of Monsoon Accessorize has told suppliers that they need to offer “assistance and contributions” to ensure the stability of the fashion chain.

In a letter seen by The Times, Peter Simon tells suppliers: “We will expect a contribution to dealing with the current situation.” Mr Simon, who founded the group in 1970 and took it private in a deal valuing it at £755 million last year, wrote that the “contributions” to Monsoon Accessorize would be necessary “to protect its financial position as a secure organisation”.

The difficulties faced by Monsoon have highlighted the plight of the retail sector, which is struggling in the face of a slump in the value of the pound and the economic downturn during the crucial Christmas period.

Last night Mr Simon toldThe Times: “There is no question about the financial stability of the company, but if trading is to continue badly all through next year we have got to ensure that we start protecting our margins.”

The group said that it had had to slash prices by up to 50 per cent to clear stock and was asking its manufacturers to improve their terms. Mr Simon added: “Let me be clear: there is more cash in this company than when it went private a year ago.”

The company’s net cash is “very similar” to the £80 million last year, according to Mr Simon, despite trading conditions being the worst he has seen in more than 35 years. He paid £188 million to buy out minority shareholders in Monsoon last year, in a deal financed by RBS. He already owned a 75 per cent stake.

The slump in sterling has hit Monsoon’s margins by pushing up the cost of imported goods.

Last night, MFI, the furniture retailer, closed its doors for the last time, underlining the unprecedented difficulties faced by the sector. Its 1,400 workers were going home for Christmas without jobs to return to next year.

Parts of the retailing industry, rather than savouring a last-minute rush to the tills, are hanging on desperately, hoping that a slew of last-minute discounts will avert what some fear will be the worst Christmas since rubbish piled up in the streets during the Winter of Discontent in 1978-79.

B&Q, the DIY chain, joined the rush yesterday to cut prices early and heavily, announcing up to 75 per cent off on thousands of lines beginning at 7am on Christmas Eve. Superdrug announced up to 90 per cent off from Boxing Day. Marks & Spencer has already taken a third off prices of all knitwear, lingerie and sleepwear.

Analysts fear that discounting has eroded retailers’ ability to charge full price. Shoppers appear to be holding back for further discounts. Nick Bubb, a Pali International analyst, said that the discounts were leading to a vicious circle in which falling sales led to further discounting, thereby harming the economy.

The weather could help. The forecast is for dry, crisp, seasonal conditions this weekend.

— Today – at 12.15pm, to be precise – retail spending is expected to reach its annual peak. If you are preparing to brave the high street today, it may be some comfort to know that you are far from alone in leaving your Christmas shopping so late. In fact, Visa expects card transactions on its network to hit a 2008 record of 42,000 per minute at this time, and to maintain that level for the next five minutes, so that by 12.20pm 210,000 card payments will have been made.

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