Fashion spending now out of vogue
HIGH street fashion firms took a £1.4billion hit yesterday amid fears of a spending slowdown.
Shares in industry giant Next crashed 9% after it revealed “extremely volatile” trading.
The clothing and homeware chain’s high street stores were worst affected, with sales down 7.7% in the past three months.
Boss Lord Wolfson said business was up across its stores and online in August and September, but sales dipped in October.
The update from industry bellwether Next prompted investors to dump shares in rivals. Those of Marks & Spencer fell 4.4%, while Debenhams’ dropped 4.6%.
Even firms which have bucked the gloom until now suffered. A 2.1% fall in Primark-owner Associated British Foods’ shares and near 1% drop for Superdry took the collective amount wiped off all their stock market values to more than £1.4bn.
Next notched up a 1.3% rise in groupwide sales over the three months, helped by a 13.2% jump in takings at its online and catalogue Directory arm. Wolfson said shoppers were only buying “as and when they need”.
The millionaire Tory peer reckons an expected 0.25% rise in the Bank of England’s base rate today won’t make much difference to people’s spending habits.
But he added: “If it’s the beginning of a move towards significantly higher interest rates, then it won’t be a good thing for the consumer.” George Salmon, equity analyst at broker Hargreaves Lansdown, said: “A particularly weak October means the group enters the all-important Christmas period with less momentum than it would have liked.” Next kept its central profit outlook for the year at £717million, which would mark a 9% fall on last year – its first drop since the financial crisis. Neil Wilson, a senior market analyst at ETX Capital, said: “The firm has no idea what to expect over the vital Christmas trading period.” Yesterday’s fall in Next’s share price follows a big rise since August.