The first listed retailer to announce its full Christmas figures, Next [IRDX RNXT] said today that that full-price sales fell by 0.4% in the 54 days from November 1 to December 24 – the fourth quarter of its financial year. While its store-based retail division showed a 3.5% fall in full-price sales over that period, its predominantly online directory arm showed a rise in sales of 5.1%.
In the year to December 24, total full-price sales were down by 1.1%, with retail sales down by 4.3%, and directory sales up by 3.6%. Overseas sales grew by 18%.
It was only when the fashion retailer, a Leading retailer in IRUK Top500 research, cut its prices that it grew sales. Total sales for the year to date were up by 0.4% on last year when markdowns were included. That’s not to say that the end-of-season sale went well: there, sales fell by 7% against last year, at a cost of £3m.
The fashion retailer has reduced its profit forecasts, indicating it expects profits to be down by around 1%; if there is an improvement that’s likely to be no higher than 1.25% on last year.
The outlook isn’t good: Next reiterated its guidance that it expected to raise prices by 5%, pushing sales revenue down by about 0.5% in response to the devaluation of sterling that followed the Brexit decision. It also expects to see general spending fall as rising inflation erodes earnings growth.
In today’s statement it said: “In these circumstances, we are budgeting for Next Brand full price sales growth (at constant currency) in the year to January 2018 to be between -4.5% and +1.5%. The mid-point of this range is -1.5%, which is marginally worse than the current year’s performance.
“Overseas sales will be boosted by the devaluation of the Pound which means that we expect total reported full price sales to be around +1% better than the constant currency numbers detailed above.”
Next was one of the retailers that held out against cutting its prices during Cyber Week.