Next boss underplays Christmas performance as fellow retailers brace for disappointing results
Next has today ( 5 January) labelled its performance over the crucial Christmas period as "disappointing", blaming the warm weather for a 0.5 per cent fall in sales across its 500 high street stores. It is among the first of the high street retailers to report figures for the festive quarter, with analysts expecting its bedfellows to have experienced similar challenges.
On the back of its results - covering the period between 26 October and 24 December - Next boss Lord Simon Wolfson warned that annual pre-tax profits will be closer to £817m, which would fall into the lower end of its previous guidance (between £810m and £845m) issued in October.
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In a statement it reiterated that the disappointing performance in the fourth quarter was mainly down to the unusually warm weather in November and December. However, it added that it was specifically concerned with its Next Directory performance on the back of just a two per cent rise in sales.
"We would not want to allow difficult trading conditions to mask any mistakes and challenges faced by the business," read the statement.
"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."
However Phil Dorrell, partner at consultancy outift Retail Remedy, said that although Next's results are not as strong as in previous years, they are well ahead of the curve and notably ahead of what analysts predict Marks and Spencer to announce later this week.
"Lord Wolfson is known to underplay performance, and warns of future challenges, but Next consistently delivers, remain unflustered, and stay true to its core customer," he added.
"The deep customer knowledge built over many years of catalogue and then online experience give Next a position of strength that it knows how to leverage. Playing down Black Friday and not being drawn into the frenzy despite the lure of footfall, helped Next deliver another quarter of solid trading."
On Thursday (7 January), analysts have forecast that M&S chief executive Marc Bolland will report a fall of more than five per cent in sales of its clothing.
According to a footfall study from Springboard, across the board high street retailers will have seen a three per cent fall in shoppers through their doors between the 28 of December to 1 January, compared to the same period in 2014.