Next says Christmas won’t save it from slump in sales
NEXT predicts its fourth-quarter sales will fall by two per cent as people struggle with surging living costs.
This period includes all-important trading in the run-up to Christmas.
The high-street bellwether said that in the third quarter this figure rose 0.4 per cent thanks to a strong performance in September and a good week at the end July.
The end of September was particularly strong when falling temperatures boosted demand for heavier clothes.
However October, the last month of Next’s third quarter, saw sales drop 0.7 per cent and the retail fashion giant expects them to continue to fall in the fourth quarter.
Back in September, chief executive Lord Wolfson downgraded the full-year pre-tax profit forecast from £860million to £840million.
Despite the increasing pressure on household finances, Next expects to meet its profit target.
However, analysts believe that the chain will find it tough to do so and predict that its share price performance may suffer in the meantime.
Shore Capital analyst Eleonora Dani said: “While it is reassuring to see the resilient sales in the quarter, noting the consumer sentiment weakness, inflation continues to hit record highs.”
She said because Next shares historically fall as inflation picks up, trading is likely to be “softer in the short term”.
Next’s online revenues are dipping as people increasingly shop in person, a trend being echoed across the high street, according to data from retail consultant Springboard.
It found footfall or number of visitors at real-world shops last month was up 5.2 per cent on the same time last year.
High streets saw the biggest uplift in numbers, up 9.5 per cent, followed by shopping centres with 7.7 per cent. Retail parks – strong performers in the pandemic – only managed a 0.3 per cent rise.
Elsewhere, Sainsbury’s says that it is creating 18,000 temporary jobs to help it cope with the Christmas rush.
Most will be in stores, helping to stock shelves and pack online orders.
Its Argos arm will take on 2,000 temps, while Sainsbury’s logistics division will account for the remaining 1,000.