Next blames warm weather for ‘disappointing’ sales
Retailer Next has blamed the warm weather in the final few weeks of last year for a “disappointing” trading performance in the run-up to Christmas.
The company also said trading at its Next Directory online and catalogue operation had been difficult, due in part to poor stock availability.
Between 26 October and 24 December, sales at its High Street shops fell 0.5%, but rose 2% at the Directory arm.
Next, whose shares closed down 4.6%, lowered its full-year profit estimate.
The company, which has more than 500 stores, says it now expects annual pre-tax profits to be about £817m. This is at the lower end of its previous guidance issued in October, when it predicted profits of between £810m and £845m.
The retailer, which did not take part in some of the heavy discounting sales events at the end of last year, said in a statement: “We believe that the disappointing performance in the fourth quarter was mainly down to the unusually warm weather in November and December.”
The statement also pointed to “mistakes and challenges” faced by the business. “Specifically, we believe that Next Directory’s disappointing sales were compounded by poor stock availability from October onwards.”
In addition, Next said that online retailing was becoming tougher as competition intensified.
Nevertheless, the company said full-price sales for the year-to-date were 3.7% ahead of last year, just below the bottom end of Next’s previous guidance of a 4%-6% rise.
Analysts said the figures, the first winter trading update from one of the big retailers, suggested other High Street firms may have struggled.
Neil Saunders, from retail analysts Conlumino, tweeted: “Next’s lacklustre results do not bode well for the rest of the High Street; warm weather was the main source of its woes.”
Maureen Hinton from retail consultancy Verdict told the BBC that the results indicated a “very tough” market.
However, Phil Dorrell, a director at Retail Remedy, told the BBC that the figures were “pretty positive” for Next.
He told BBC 5 live that after other retailers have released their Christmas sales figures, the view could be: “Wow, Next did really well.”
He expects Marks and Spencer to report a decline in sales for the Christmas period when it releases figures on Thursday.
Department store chain John Lewis will reveal how it fared over the festive period on Wednesday.