Next downgrade dents retail shares

THURSDAY 30 OCTOBER 2014 THE UK’s Indian summer gave Next a cold shower yesterday as the fashion retailer was forced to downgrade its full-year profits and sales guidance.

Marks & Spencer and Next shares were both lower, while sentiment was hit elsewhere in the retail sector as shares in B&Q owner Kingfisher and electricals business Dixons Carphone also fell.

But the sell-off was offset by improved sentiment in the wider market as the FTSE 100 climbed for a second session in a row, by 51.70 points to 6453.87.

It followed a rise in Asian markets as the mood was buoyed by expectations that the US Federal Reserve was about to signal that it was in no hurry to raise interest rates. Commoditybased stocks were again behind London’s rally as Randgold Re- sources lifted 44p to 4021p and Glencore rose 4.25p to 323.7p.

Next’s warning that the mild autumn weather had produced a less than sunny outlook for its bottom line meant its shares fell 20p to 6415p.

Sales of jumpers and coats have been hit by the warmer than expected weather and the group said its full-year profits would be £25 million lower than expected at £770m.

Many analysts had already factored in the decline after a previous warning in September.

Next’s retail rivals joined it on the fallers’ board as investors weighed up how the weather warning would hit their performances.

Marks & Spencer, which reports half-year results next week, slipped 2.6p to 404p, and Primark owner Associated British Foods eased 2p to 2740p.

Superdry fashion chain SuperGroup was 33p lower at 889p while elsewhere in the retail sector Kingfisher was 0.4p cheaper at 295.3p.

In New York,

stocks

closed with slight losses after the Federal Reserve ended its monthly bond-buying programme and expressed confidence in US economic prospects.

Major indexes were volatile following the central bank’s statement. The Dow Jones fell 31.44 points, or 0.18 per cent, to close at 16,974.31.

Material shares were lower throughout the session, a decline in Facebook pressured the Nasdaq, but strength in energy and financial shares helped the market recover.