Acid test for sports retailer’s recovery strategy

NEXT has been one of the best performing stocks in the FTSE 100 Index in the past year despite the abysmal conditions on the high street.

The chain, which will provide a third quarter trading update on Wednesday, has seen smaller sales declines than most of its competitors despite its policy of not discounting.

But there are now fears that some of the shine could come off Next in its third quarter update because the warm September weather is expected to have hit sales of its autumn and winter ranges.

Charlie Muir-Sands, an analyst at Deutsche Bank, thinks like-for-like sales will be down 6.5 per cent in the three months to October.

Next has successfully passed on price rises and expects to push through hikes of about 8 per cent in its second half.

Analysts say this is partly due to the strength of its ranges and the recent rebound in the performance of womenswear, which has been boosted by a range of swimwear designed by former Spice Girl Geri Halliwell.

Ailing retailer JJB Sports, which narrowly avoided collapse this year, will reveal tomorrow whether its rescue plans have borne any fruit.

JJB has been brought to its knees in recent months as it struggled against tough competition from buoyant rivals JD Sports and Newcastle United owner Mike Ashley’s Sports Direct.

Sales have slumped despite the retailer putting on discounts, which have hammered its margins.

The Wigan-based firm earlier this year struck a voluntary arrangement with its landlords which allowed it to close some of its outlets. It also raised £96.5m from shareholders to revamp 150 shops, buy fresh online ranges and retrain store staff.

The turnaround plan is still being developed and JJB recently warned it could take between three and five years for a full transformation.

In its last trading update, JJB reported a 14 per cent fall in like-for-like sales between 14 March and 3 April.

Analysts say JJB needs to start growing its underlying sales again if its turnaround plans are to have any chance of success. Freddie George, an analyst at Seymour Pierce, expects the company to make full-year losses of £40 million, against losses of £74.6m the previous year.

Online fashion retailer Asos has staged a recovery as growth overseas is more than compensating for a sharp slowdown in the UK.

Shares have rallied by 20 per cent since its last update, though still remain more than a third lower than the highs seen in August.

Concern about the impact of tough economic conditions on its core 16 to 34-years-old customer base caused the shares to tumble while the company confirmed UK sales showed almost no growth over the three months to September.

Brokers expect first half figures, to be published next Thursday, to benefit from both this and the strong overseas growth.

Fraser Ramzan, an analyst at broker Nomura, expects interim profits to jump by 63 per cent to £11.4m.