Fears festive season could prove a turkey

Fashion chain Next will kick off Christmas updates for the retail sector tomorrow as high street firms struggle amid difficult trading conditions.

Analysts expect the high street bellwether to post another set of disappointing figures, with Numis pencilling in a 0.5% decline in sales in the two months to December 24.

However, investors will pay greater attention to the breakdown of Next’s sales performance over the period following another troubling year.

The group saw a 7.7% plunge in high street sales in the third quarter, while its directory arm recorded a 13.2% rise.

In March, Next reported its first drop in annual profits since the financial crisis with a 3.8% fall to £790.2 million.

Graham Spooner, of The Share Centre, said recent data had done nothing to inspire confidence ahead of Next’s update tomorrow.

He said: “The latest news that footfall on the high street for the Boxing Day sales was lacklustre won’t make pleasant reading for investors in Next and other retailers.”

Among those due to report are Morrisons, Sainsbury’s, Ted Baker, Tesco, Marks & Spencer, John Lewis, Debenhams, ASOS and Dixons Carphone.

Clive Black, of Shore Capital, said: “We continue to highlight that many retailers expected flattish sales and while there was some evidence of early discounting there has been limited evidence of panic activity, last seen at Christmas in the height of the financial crisis.

Most retailers have been preparing for a tougher trading environment manifested in lower stock commitments and adjusted operating schedules.

“Going into the January reporting season we expect upgrades and downgrades and some in between.”