Hopes that Next’s (NXT) crucial Christmas period would reignite interest in the shares were dashed on Tuesday, as the clothing retailer blamed warm weather in November and December for another disappointing trading update.
Advertisement
In the 60 days from October 26 to December 24, total brand sales grew 0.4 percent, as a two percent increase in Next Directory offset a 0.5 percent decline in Next Retail.
‘Specifically, we believe that Next Directory’s disappointing sales were compounded by poor stock availability from October onwards. “In addition”, it said, “the online competitive environment is getting tougher as industry-wide service propositions catch up with the Next Directory”.
Next said it had not discounted any stock before the end of season sale, but its full price sales for the year sales were now 3.7% ahead of last year, shy of previous guidance for growth of 4-6%.
United Kingdom fashion retailer Next said its central full-year profit forecast of £817m (€1.1bn) had been revised following the Christmas performance, but did not reveal its previous guidance. The 0.4 per cent rise includes sales at stores open less than a year, meaning the like-for-like sales figure preferred by analysts could have been negative. Next stuck to its mantra of not discounting before Christmas, allowing it to at least maintain its profit forecast for the year, albeit at the low end of its expected range.
The shares of next, whose, lowered its full-year profit approximation. The company, which has a well-established policy of returning surplus cash to shareholders through share buybacks or special dividends, also announced that it would pay another special dividend of 60p.
The statement also pointed to “mistakes and challenges” faced by the business.
Because Next is a strong contender in the sector and is the first to report on Christmas trading, its results portend badly for rivals such as Marks and Spencer, which is due to update the market on Thursday.
Advertisement
But sales in the division may have plunged by as much as 5.5%, according to one broker.
