Fashion chain Next cautious despite sales jump
Fashion chain Next showed signs of a recent sales improvement today, although the group said it still faced "extremely volatile" trading conditions.
Like-for-like sales across stores unaffected by new openings slipped by 2.9% in the 14 weeks to November 3, reflecting an improvement from the 4.8% decline seen in the first six weeks of the second half of its financial year.
Sales from the Next Directory - a key profits driver for the business - also returned to like-for-like growth, up 1.2% compared to a 2.9% decline in the first six weeks.
Next said a good September had given way to a disappointing October, but the retailer added that full-year profits forecasts remained in line with market expectations.
The group added: "We remain cautious about the consumer environment, with many customers now experiencing considerable year on year increases in their mortgage repayments."
Next's update on tougher high street conditions during last month comes as rising interest rates and a slowing housing market threaten to squeeze consumer confidence.
This week the British Retail Consortium (BRC) said like-for-like UK retail sales in the UK rose by 1% in October - the weakest growth since last November.
Despite the "uncertain" consumer outlook, Next said the like-for-like sales declines from its stores were still expected to fall within the 1% to 3.5% range previously guided.
The retailer also gave a modest upgrade to its hopes for the Directory, with sales growth of up to 2% now forecast for the year, compared with the flat growth predicted in September.
The catalogue has faced competition from rival groups improving their online sales offering while Next has also tightened its credit criteria, affecting revenues.
Chief executive Simon Wolfson is attempting "get the magic back" into the group's brand by revamping stores and seeking to move its clothing range upmarket to fight off low-cost competition with its Next Signature range.
In September the group, which has 488 stores and around 40,000 staff, posted pre-tax profits of £198.2m (€135.24m) for the six months to July 28.
