Mild October holds back sales at Britain's Next
British clothing retailer Next on Wednesday reported sales for its latest quarter below some analysts` expectations and said trading was "extremely volatile", sending its shares as much as 9 percent lower.
The news is the latest sign a faltering economy is hitting consumers and adds to the dilemma for the Bank of England as it weighs up whether to lift interest rates for the first time in ten years on Thursday to curb inflation.
Shares in Next had risen by 26 percent in the last three months on hopes the group was starting to turn the corner after a difficult couple of years.
But they were down 4.5 percent at 4,702 pence at 0930 GMT, while shares in rivals Marks & Spencer and Debenhams were down 3.4 percent and 2.9 percent respectively.
Next, which trades from more than 500 stores in the UK and Ireland, 200 stores in 40 countries overseas, and the Directory internet and home shopping business, said sales in August and September were up strongly on last year as cooler temperatures drove demand for autumn/winter ranges. However, sales dipped in October, which was unseasonably mild.
"(The) sales performance has remained extremely volatile and is highly dependent on the seasonality of the weather," it said.
Next`s total full-price sales rose 1.3 percent in the 13 weeks to Oct. 29, its fiscal third quarter, below some analysts` expectations of a rise of over 4 percent but ahead of the second quarter`s 0.7 percent increase.
"A particularly weak October means the group enters the all-important Christmas period with less momentum than it would have liked," said Hargreaves Lansdown equity analyst George Salmon.
Next Chief Executive Simon Wolfson said the third quarter outcome was, however, in line with management`s expectations.
"I can`t take responsibility for the analysts` number, it`s bang in line with where we expected to be," he told Reuters.
Next is not alone in reporting a tough October. On Tuesday John Lewis, Britain`s largest department store group, reported a fifth straight fall in weekly sales.
Britain`s most successful clothing retailer this century in terms of profits, Next has faltered over the last two years due to a shift in spending away from clothing and into holidays and entertainment that it first identified in 2015.
Full-price sales in Next`s stores were down 7.7 percent, but were up 13.2 percent in its Directory business.
Next maintained its central profit guidance for the full year - a pretax profit of 717 million pounds ($953 million), down from 790.2 million pounds in 2016-17.
It narrowed its guidance for full-price sales, forecasting a range of down 1.75 percent to up 1.25 percent. It had given a range of down 2.0 percent to up 1.5 percent in September.
Next said comparative sales numbers with last year were much harder for the fourth quarter than in the third.
($1 = 0.7526 pounds)
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.