High street bellwether Next is likely to disappoint on profits this week, prompting concerns that the fashion sector might be in for another tough season.
The group downgraded its central full-year profit forecast to a rise of 4 per cent to £817 million in January from £827m after it blamed unusually warm weather for a “disappointing” festive sales performance.
It posted a surprise 0.5 per cent fall in sales across its 540-strong store estate in the 60 days to Christmas Eve, while growth across the Next Directory online and catalogue business slowed sharply to 2 per cent as its trading woes were compounded by stock shortages and tougher online competition.
Analysts at Haitong said that sales at Next Directory, which has been an engine of growth for the last decade, have been slowing, partly due to the establishment of clothing operations at US online giants Amazon and Google.
The brokerage noted: “Next has been unable to stimulate sales growth from the Directory to the extent it has wished.”
Next said over the coming year it is budgeting for full price sales growth of between 1 per cent and 6 per cent, with profits expected to grow in line with revenues.