Next’s full price sales for the fourth quarter slipped 0.4% year on year, as the retailer gears up for a further slowdown in 2017.
In store full price sales for the 54 days to 24 December were down 3.5% on last year while directory sales, which includes Next Label and online, were up 5.1%.
For the year to 24 December total sales including promotions were up 0.4%, while full price sales were down 1.1% on 2015.
The retailer said that despite a “difficult” season Sale stock was well controlled and down 3% on last year. However, sales generated from Next’s end of season Sale were down 7% on 2015 and the cost of the lower clearance rates was £3m.
Next said it expected the slow-down in spending on clothing and footwear to continue throughout 2017 and into January 2018 as inflation “begins to erode earnings growth” and the deflation of the pound causes prices to rise.
The high street chain said prices won’t rise by more than 5% and the increase will hit sales revenue by 0.5%.
As a result Next predicts full price sales growth 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.
However, overseas sales will be boosted by the devaluation of the pound.
Costs will also increase next year as The National Living Wage, the national business rates revaluation, the Apprenticeship Levy and energy taxes will add around £13m to Next’s cost base. General inflation in wages and other non-product costs will increase by an additional £6m. The retailer also intends to spend around £10m improving its website systems and online marketing.