Next pre Christmas sales ‘disappointing’ says retailer
RETAILER Next admitted to a "disappointing" Christmas sales performance today but said it was cheered by the strength of online trading.
The group, which operates 520 stores, said high street sales between August and Christmas Eve were down 2.7pc on a year earlier, despite the previous year's figures being hit by cold weather.
This was more than offset by a 16.9pc rise at its online and catalogue Directory business. Overall sales for the Next brand were 3.1pc higher, in line with its guidance in November.
Although the final week before Christmas was strong, overall sales in November and December were "disappointing", as it refused to discount stock and maintained its profit margins.
But more people left their shopping until after Christmas when Next put on a high profile sale, which it said "went well".
The group narrowed its full-year profits guidance to £7 million either side of £565 million, compared to £551 million a year earlier.
However, it said profits next year would only show a slight improvement amid challenging conditions for consumers.
Next, which has been one of the best-performing stocks in the FTSE 100 Index over the past year, saw shares slump 5pc. Rival Marks & Spencer fell 2pc.
Matthew McEachran, an analyst at Singer Capital Markets, said the weaker-than-expected performance may lead the City to downgrade Next's profits forecasts by 3pc.
But Next had some good news for consumers as it confirmed that it does not expect to hike prices over the coming year.
The group last year openly passed on price rises, such as the soaring cost of cotton, to shoppers as it maintained its margins.
It predicted that the squeeze on consumers will ease this year, with inflation dropping close to average wage growth. But it warned that the eurozone crisis and rising unemployment would continue to drag on confidence.
The group said its stock levels at Christmas were 10pc higher than a year ago, reflecting the weak festive trade.
But the strong post-Christmas sale, which saw consumers queuing outside stores across the country after many of its goods were reduced to half price or less, was expected to help shift the stock.
It said: "A number of factors have subdued sales in the final quarter and it is hard to judge to what extent warm winter weather and higher levels of competitor discounting masked the deeper, longer-lasting economic effects."
As a result, it was cautious about its performance over the coming year, but said it expected to generate £200 million surplus cash to return to shareholders.