Next warns of sales slowdown while stock availability still ‘challenging’
Fashion retailer Next has forecast a slowdown in sales in the run-up to Christmas due to a combination of factors including inflation, staff shortages and supply chain problems.
The high street and online fashion and homewares retailer said stock availability remained challenging despite recent buoyant sales.
The business said sales for the last three months were 17 per cent up on where they were during the same period two years ago pre-Covid – which was better than they previously expected. However in a trading update Next said it expects growth to slow to 10 per cent over the next three months.
It said this was down to less pent-up demand from shoppers and supply issues which, however, were getting better and that inflation was also likely to hit demand as households tighten their belts.
Shares in the business were down 2.6 per cent this morning at £80.86. The group raised its full-year sales growth outlook to 11 pert cent from the 10.7 per cent, but kept its profit guidance at £800 million.
Next said: “Stock availability has improved but remains challenging, with delays in our international supply chain being compounded by labour shortages in the UK transport and warehousing networks.
“However, to date, stock limitations appear to be offset by strong underlying demand. Although consumer finances are in good shape, price increases in essential goods (such as fuel) may moderate demand for more discretionary purchases.”
The firm said sales in the five weeks to October 30 rose by 14 per cent on two years ago, generating around £4 million more profit than expected.
But the group said this was set to be offset by slowing sales growth running up to Christmas, as well as higher costs of air freight and other distribution costs in the difficult supply conditions.
Next boss Simon Wolfson recently said some areas of the business were coming under pressure from a lack of foreign workers, particularly in logistics and warehousing, which could affect its delivery service going into the peak festive season.
