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Warm December cools Next pre-Christmas in-store sales

Published 05/01/2016

Sales at Next’s high street stores have fallen by 4.7%
Sales at Next’s high street stores have fallen by 4.7%

High street chain Next blamed unseasonably warm weather for a "disappointing" performance in the run-up to Christmas as it posted a fall in store sales and sharp slowdown in its Directory business.

The retailer said full-price sales fell 0.5% across its stores in the 60 days to December 24, while sales across its Next Directory online and catalogue arm lifted 2%.

Next said its trading woes were compounded by poor stock availability from October and tougher online competition.

Its worse-than-expected festive performance means the group expects full-year profits to come in towards the bottom end of its forecast, at £817 million, although this would still be a 4.4% hike on the previous year.

Next, which holds off from discounting until Boxing Day, said that, while the warm weather was the main reason for its disappointing trading, "we would not want to allow difficult trading conditions to mask any mistakes and challenges faced by the business".

It added: "Specifically, we believe that Next Directory's disappointing sales were compounded by poor stock availability from October onwards.

"In addition, the online competitive environment is getting tougher as industry-wide service propositions catch up with the Next Directory."

The overall performance for full-price brand sales across stores and Directory were 0.4% higher for the 60 days to Christmas Eve - a sharp slowdown on the 3.3% hike seen in its half-year to July.

This has left sales for the year to date up 3.7%, running below previous guidance, although the group said its move not to discount ahead of Christmas meant its full-year profit range was maintained at between £810 million and £845 million.

Next said its central full-year profit forecast of £817 million had been revised following the Christmas performance, but did not reveal its previous guidance.

The group also guided for overall brand sales across its 540 stores and Directory arm for the year to January 2017 to be between 1% and 6% higher.

Next is the first of the major retailers to unveil festive trading figures and sets the scene for what is expected to have been a tough Christmas for clothing chains after mild weather in November and December.

The unusual weather conditions led to widespread discounting on the high street as stores looked to shift stock in the run-up to Christmas.

Department store chain John Lewis will reveal how it fared tomorrow, while high street bellwether Marks & Spencer gives its verdict on festive trading on Thursday.

The warmest December on record is expected to have led to more sales pain for M&S in its general merchandise and clothing arm, with the City pencilling in a 2% drop in the division over its third-quarter.

But sales in the division may have plunged by as much as 5.5%, according to one broker.

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