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Warmer weather hits sales at Next

Tuesday January 5th 2016

Next has said its full price sales in the 60 days to 24 December edged up 0.4% year-on-year as it maintained gross margins by not discounting stock until its clearance sale. However, trade was impacted by the unseasonably warm weather in November and December.

The fashion and homewares retailer said stock for the sale was 7% lower than last year and clearance rates broadly in line with last year.

While Next directory sales, which include online and mail order sales, grew by 2% in the period, sales at Next’s high street stores edged down 0.5%.

In a statement Next said its “disappointing” performance in the fourth quarter was mainly down to the unusually warm weather in November and December.

It added: “Whilst warm weather may have been the main reason for a difficult fourth quarter, we would not want to allow difficult trading conditions to mask any 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, the online competitive environment is getting tougher as industry-wide service propositions catch up with the Next Directory.”

The results mean that full price sales for the year to date are currently 3.7% ahead of last year, just below the bottom end of the retailer’s previous guidance of growth of between 4% and 6%. The increase includes a rise of 2.1% at Next’s high street stores and 6.1% growth in Next Directory sales.

Next said good control of margins, costs and stock, along with healthy clearance rates, means that it expect profits for the full year to remain within the profit guidance of £810 million to £845 million issued in October.

Its revised central forecast for full year group profit is now £817 million, although this might increase or decrease by £7 million depending on trade in January. £817 million would represent an increase of 4.4% on last year.

The retailer is currently budgeting for Next full price sales growth in the year to January 2017 to be between 1% and 6%.