Next dip sparks fears amid clothing retailers

High street stalwart Next triggered fears yesterday of a bleak festive trading period for clothing retailers after the usually resilient company blamed warm weather for its “disappointing” sales performance.

Lord Wolfson, Next’s chief executive, revealed a shock 0.5 per cent fall in the firm’s sales across its 540 UK stores in the two months to Christmas Eve, with the City now apprehensive about the trading update from rival Marks & Spencer tomorrow. Sales growth in the Next Diectory online and catalogue division slowed sharply to 2 per cent from 6.2 per cent in the third quarter, the news wrongfooting the City as the company has been the strongest player in the UK’s clothing sector for a decade.

Shares fell 4.6 per cent to close at 6,860p.

The group’s store sales in the year to 2 January rose 2.1 per cent, while the online and catalogue business was up more than 6 per cent.

Next did not discount stock at any time in the two months to 24 December as usual, in order to protect profit margins, but said that it had been hit by poor stock availability and rising online competition.

Wolfson said sales of coats and knitwear were particularly impacted last month, the warmest December on record for the UK.

“My guess is that most, but not all, clothing retailers will have been affected in a similar way,” he said.

The chief executive added: “Consumers are waiting until they need something before they buy it. They need a prompt, either colder weather or the start of a sale.”