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Next sees sales fall in its stores – but rise online – and warns of possible slowdown in spending

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Multichannel retailer Next today said that sales had fallen by 0.2% in the first quarter of its financial year as colder weather reduced demand for clothing. But it lowered its sales expectations for the year as it warned that there might be a wider slow-down in consumer spending ahead.

Full-price sales between January 31 and May 2 fell by 0.9%, with store sales down by 4.7% while its primarily-online Next Directory sales rose by 4.2%. The figures, said Next, a Leading company in IRUK Top500 research, were “at the lower end” of its full-year sales guidance, which envisaged growth of between 4% and -1%.

The fashion-to-homewares retailer said sales had suffered by comparison with a much warmer Easter period in 2015. “We believe it is unlikely (but possible) that sales will deteriorate further, and we have seen a significant improvement over the last few days as temperatures have risen,” it said in today’s trading statement. “However, the poor performance of the last six weeks may be indicative of weaker underlying demand for clothing and a potentially wider slow-down in consumer spending. Given this uncertainty, we think it is prudent to widen and lower our full price sales guidance range to -3.5% to +3.5%. The lower end of this range is based on sales for the rest of the year continuing to run at the rate of the last six weeks.”

Next set out at the time of its full-year results how it would develop its business in an increasing competitive market. It said that would see it improve and differentiate its directory business in particular, in areas from mobile apps to collection from third-party stores.

At the time, Next said it was acting as growth in its directory business inevitably slowed as the market matured. “Partly,” it said at the time, “this is as a result of competitors catching up with our delivery and warehousing capabilities; partly as a result of changes in the ways customers are shopping online. It is this last point that provides us with the opportunity to improve the business going forward.”

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