Fear for Next profits as Kingfisher faces stiffer competition

BELLWETHER retailer Next will give the City a feel of consumer confidence on the high street, while B&Q owner Kingfisher is expected to outline its plans to battle the new proprietors at rival Homebase.

High street chain NExt is expected to post lower than expected annual profits on Thursday.

The firm downgraded its central full-year profit forecast to a rise of 4 per cent to £817 million in January, from £827 million.

The retailer posted a 0.5 per cent fall in sales across its 540 stores in the 60 days to December 24, while growth across its Next Directory online and catalogue arm slowed sharply to 2 per cent.

While the group said the warm weather was the main reason for its disappointing trading, it admitted that it had suffered due to stock shortages after failing to anticipate a bigger-than-expected shift in buying patterns.

Next said over the coming year it is budgeting for full-price sales growth of between 1 and 6 per cent, adding that it expects profits to grow in line with revenues.

The City will want an update on how B&Q and Screwfix owner KingfishEr plans to battle the new competition that has swept into the DIY sector when it posts its full-year results on Wednesday.

Rival Homebase was bought by Australian conglomerate Wesfarmers for £340 million in January from Argos owner Home Retail Group.

Wesfarmers managing director Richard Goyder called the £38 billion UK home improvement and garden sector an “attractive market”.

However, the City expects to see Kingfisher’s annual pre-tax profit fall by 4 per cent to £688 million as the group presses on with its revamp and its UK store closure programme that will scrap 60 stores.

This comes after Kingfisher said in January, following the Homebase sale, it would boost annual profits by £500 mover five years at its powerhouse trade-focused hardware arm Screwfix as it looks to step up the group’s financial performance.

It also pledged to return £600m to shareholders within three years through a share buy-back scheme.