British clothing retailer Next reported a 1 per cent rise in sales in the run-up to Christmas in line with its own expectations, confounding fears of poor festive trading.
But the company also cut its profit guidance for the year, a warning sign to other retailers, such as Marks and Spencer and Debenhams.
Next, the first major listed retailer to update on Christmas trading, said on Thursday total full-price sales including interest income rose 1.5 per cent in the period from October 28th to December 29th, the bulk of its fourth quarter. That outcome compared to third quarter growth of 2.0 per cent.
Discounted heavily
The retailer trimmed its profit guidance for this year, forecasting full-price sales growth of 3.2 per cent and pretax profit of £723 million (€799.6 million) versus £726.1 million (€803 million) made in 2017-18.
It was previously forecasting sales growth of 3 per cent and profit of £727 million (€804 million).
Retailers discounted heavily in the days ahead of Christmas, rather than wait for December 26th to kick off sales. Next held back from the price slashing, but didn’t cite it as a reason for the profit cut. Competitors that discounted more heavily will have to prove that extra sales made up for the thinner margins.
– Bloomberg, Reuters
