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Big freeze hits high street stores

Fashion chain Next has said it lost £22 million in sales as retailers revealed the impact of December's big freeze on festive trading.

The disruption caused by snow and ice meant Next posted a 6.1% slump in retail like-for-like sales between August and Christmas Eve, although it said it remained on track to improve profits in the current financial year.

There was no such encouragement from music and games retail chain HMV, which said its peak trading period had been "significantly undermined" by the weather as it continued to struggle in the face of stiff competition.

HMV's UK and Ireland like-for-like sales slumped by 13.6% in the five weeks to January 1, despite easier comparisons with trading a year earlier.

Shares plummeted 24% after the company, which has some 600 HMV and Waterstone's stores in the UK, warned profits for the year to April would be near the bottom of the current range of City forecasts.

The updates from Next and HMV set a downbeat tone at the start of the retail sector's festive reporting season, which will get into full swing next week with updates from Tesco, Marks & Spencer and Dixons Retail Group.

John Lewis offered some cheer as its figures for the five weeks to January 1 maintained its reputation as one of the sector's strongest-performing firms.

The group notched sales of £545 million in the period - an increase of 8.9% - after online sales rose by 42% on a year earlier. It said internet buying soared during the first snowfall at the start of December before shoppers braved the conditions in order to guarantee goods in time for Christmas.

As well as the severe weather, Next and HMV said overall trading conditions remained testing as under-pressure rivals continued to cut prices. Next added that the impact of Government cuts on consumer spending remained unclear, while it repeated its earlier warning that its prices will have to increase by around 8% due to higher input costs and the rise in VAT.

HMV said its underlying entertainment markets were weak and highlighted the urgency with which it needed to carry out its turnaround strategy, which has focused on broadening the product mix. It said it will close 60 stores over the next 12 months in order to save costs.

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