£22m sales lost through snow at Next
The year ahead is “uncertain”, retail giant Next said this morning. The Leicester-based fashion chain said that it was “unclear” how it would be affected by government cuts, and revealed that it lost about £22m of full price sales as a result of the bad weather in last month. The forecast was disclosed in the company’s most recent trading update.
Next said that the run-up to Christmas had presented “very challenging trading conditions”. The retailer estimated that it had lost £22m of sales due to the heavy snow at the end of 2010, which accounted for 2.2 per cent of the season’s total sales.
However, the store confirmed that its profit forecast for the year ending January 2011 remains “within the guidance issued in September and November”.
Next said that it estimated that full year profit before tax will be in the range of £540m to £555m, which is in line with current market expectations. This would represent an increase in profit of between 7 per cent and 10 per cent on last year.
For the period 1 August – 24 December, Total Next brand sales, excluding VAT, were up 0.2 per cent, which the company described as being “just within our +0 per cent to +3 per cent guidance”.
Despite a poorer performance in the brand’s retail division, in which sales fell by 3.1 per cent, the Next Directory finished the season up 8.7 per cent.
The company said that retail sales were “significantly affected by extreme weather conditions and increased competitor discounting on the high street before Christmas”.
A Next spokesperson said: “The outlook for 2011 is uncertain. The impact of government cuts on consumer spending is still unclear and we have yet to fully understand the impact of rising retail selling prices on overall demand.
“We reconfirm that our own prices will be increasing by circa 8 per cent as a result of higher input costs and the rise in VAT. Our best guess is that price rises will moderately suppress like for like sales, though we believe this will be offset by the addition of profitable new retail space and continued growth of directory's online business.”
