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Online fails to rescue retailers from snow effect

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Online sales failed to come to the rescue of fashion retailer Next as snow took millions off the value of its high street sales in the run up to Christmas.

The retailer, led by chief executive Lord Wolfson (pictured), said in a trading statement published this week that some £22m of full-price sales were lost thanks to the snow, with like-for-like sales down by 6.1% in the period from August 1 to December 24. And although more people initially shopped online, close to Christmas ecommerce demand fell because of the fear of failed deliveries. “Overall,” said the statement, “we believe the effect of weather on Directory was neutral.”

Nonetheless, Next sales were within the range of previous forecasts, rising by 0.2%, as an 8.7% rise in Directory, or online, sales compensated for a 3.1% fall in retail sales over the period.

The company predicts that pre-tax profits will continue to be in line with market expectations, at between £540m and £555m – or between 7% and 10% up on last year.

Looking ahead to 2011, the company said it was still unclear what effect Government cuts would have on consumer spending. However, its prices were still set to rise by about 8%, thanks to a combination of rising prices in raw materials and the VAT rise.

“Our best guess is that price rises will moderately suppress like-for-like sales,” said Next, “though we believe this will be offset by the addition of profitable new retail space and continued growth of Directory’s online business.”

Early years retailer Mothercare also said snow had badly affected its stores, especially those that are out-of-town, and had also impacted its online deliveries.

It reported a 5.8% fall in like-for like sales in the UK in the 12 weeks ended January 1 2011. Its ecommerce operation, Direct in Home, saw sales rise by 10.2% over the same period.

But, said chief executive Ben Gordon, while the quarter had started well, sales were “impacted significantly by the adverse winter weather conditions, particularly in our out-of-town stores.”

He added: “Direct deliveries were also affected and we cut off Christmas orders early to ensure that our customers received their deliveries on time. We estimate that the weather disruption has reduced UK like-for-like sales in the third quarter by approximately 4%, with toy sales particularly affected.”

As a result the company warned that its full-year profits would be below market expectations.

Meanwhile, multichannel entertainment retailer HMV said in an interim management statement that its Christmas trading had been badly affected by the weather and by “challenging entertainment markets”. It was planning to close 60 stores over the year ahead, while also cutting another £10m in costs.

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