Next fears more high street woe
FASHION chain Next yesterday predicted no let-up in the tough high street conditions and warned there was a risk of things getting worse.
The company reported a 6 per cent fall in underlying sales at its shops during the past 26 weeks and forecast they would be down by a similar amount in the next six months.
Chief executive Simon Wolfson said things were going to be difficult.
“The reason is that a lot of the increased costs hitting consumers, such as food and fuel, have only started to come through in the past three months,” he said.
Although figures for the past three months were slightly better, down just 2.4 per cent, Wolfson said that was because stores were hit by exceptionally bad weather in the same period last year.
Shares in Next fell 9dp to 995dp, dragging down Marks & Spencer, 3p lower at 259fp.
One bright spot was the company’s home shopping business, Next Directory, which accounts for about a third of turnover. It saw quarterly sales rise 5.6 per cent and six-month sales increase 2 per cent.
Across the group, half-year sales were down 1.8 per cent.
Wolfson added: “In many ways we are at the vulnerable end of the market because a lot of our customers will have mortgages and most have cars.
“But I do think the business is financially robust. We have very little debt.”
To distance itself from competitors such as Primark and the supermarkets, Next has moved away from the budget end of the market.
Its strongest sales were in more upmarket ranges, though menswear remained tough as family budgets tightened.
The company managed stocks carefully in the run-up to the summer sales and said it had bought cautiously ahead of the winter season.
City analysts have pencilled in annual profits of about £435million, down from £498million last year, although Philip Dorgan at broker Panmure said those forecasts “look fragile”.