Next has lowered its full-price sales guidance for the full year and warned there may be difficult times ahead following a tough start to the spring season.
Next’s total sales were down 0.2% between January 31 and May 2, as the cold weather in March and April reduced demand for fashion. Full-price sales slipped 0.9% during the quarter, at the lower end of its original guidance for the full year of between -1% and +4%.
It has now lowered this range to between -3.5% and +3.5%.
Sales through the Next Directory revived during the quarter after a difficult end to the last year, growing 4.2%. However, Next’s retail sales declined 4.7%.
Next said: “Much colder weather in March and April reduced demand for clothing, particularly over the Easter holiday period, which was unusually warm last year. In the same period our home and furniture full-price sales, which are much less weather dependent, were up 7%.
“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. 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 said its cash flow “remains strong”. It still expects to generate £350m of surplus cash after deducting interest, tax, capital expenditure and ordinary dividends in the current year.
James McGregor, partner at consultancy Retail Remedy, said: “It was inevitable that the weather would feature in some way in Next’s trading update and we have not been disappointed. If Next have been challenged by the unseasonal weather this season, then we can assume that the majority of fashion retailers are really suffering.
“To lower Next’s full price sales guidance range to -3.5%, indicates a sense of nervousness. Ever cautious, we are not surprised to hear [Next chief executive] Lord Wolfson warn of difficult trading ahead. His caution is understandable though, poor sell-throughs are costly. The weather is finally going the right way but the customer might yet hold off buying her beachwear.”
Next will update on sales for the first 26 weeks of the year to July 30 on August 3.