Next gives up on hopes of trading upturn
Clothing retailer Next today gave up on hopes of a trading upturn this year after reporting a 6% fall in like-for-like sales for the past six weeks.
While Next said it was unlikely the rest of the season would be as bad as the last month, it believed it was “unlikely” there would be a significant improvement in market conditions for the second half of this year.
It did manage to perform ahead of City expectations in the first half of the financial period, with profits rising by 6.1% to £172.6m (€256.6m), despite a drop of 2.9% in like-for-like sales at its core retail estate.
Next described the performance as “solid progress in a very tough environment” and said it had been helped by growth from new trading space, particularly out-of-town sites where it can offer wider ranges of clothes and home-based items. It now trades from more than 400 outlets.
Finance director David Keens believed the recent fall in like-for-like sales was down to consumers feeling the pinch, rather than the impact of the London bombings on confidence. The figure for the six weeks was also up against a strong performance from a year earlier.
Mr Keens added: “We think it’s to do with the economic climate and the fact that consumers have to spend more money on mortgage payments and fuel and other fixed costs.
"It was good to see interest rates come down last month but most people have not seen any impact as their mortgage has not been reset yet.”
