Don't get carried away by high street 'recovery', warns Next boss

Published on Wednesday 4 November 2009 20:20

SIMON Wolfson, chief executive of Next, yesterday warned investors not to get "too carried away" with talk of a recovery on the high street, as he raised the spectre of continued sales declines early next year.

The fashion chain yesterday raised its forecasts for the rest of 2009 amid better-than-expected third-quarter figures. But Wolfson signalled further problems on the horizon if the next government increases taxes. He said Next had deliberately chosen not to alter its forecasts for spring/summer 2010, amid concerns over what the next government will do to raise much-needed public funds.

Wolfson said: "No-one quite knows what the effect of increased taxation is going to be next year… I think that is a huge macro economic spectre hanging over the economy.

He added: "As long as there is a prospect of reduced (public] spending, and therefore reduced public-sector employment and increased taxation remains on the cards, I don't think anyone should get too carried away with spring/summer 2010."

Next yesterday reported a better-than-expected, 1.3 per cent decline in like-for-like sales in the 14 weeks to the end of October – the third quarter of its financial year – beating City forecasts of a 2-4 per cent slump.

The results revealed a marked easing in the rate of decline, compared with the first half when Next sales dropped 2.5 per cent.

Wolfson said of the figures: "What we can say with some certainty is that the consumer is not in freefall and we're seeing stability, if somewhat subdued stability, in consumer spending,"

The retailer said it now expects sales at its high-street stores to come in somewhere between flat growth and a 3 per cent decline in the second half of the year. It has higher hopes for its internet and catalogue business, Next Directory, pencilling in a like-for-like increase of anywhere between 4 and 6 per cent. Against these forecasts, Next is tipped to deliver full-year profits of 472 million – a 10 per cent hike on last year.