Next saw like-for-like sales fall 7% for the five months to December 24 - the bottom end of guidance given by the company.
Next said that total retail sales fell 3% over the period, which ran from July 29 to December 24, but Next Directory sales rose 1.1%. Combined retail and Directory sales were down 1.9% against the same period last year.
Next said in a statement: “Like-for-like sales were within the guidance range of -4% and -7% we gave in September and repeated in November. This was despite a worsening consumer environment and a significant increase in competitor markdown activity prior to Christmas. Next maintained its policy of trading at full price up to Christmas and stocks were well controlled going into the end of season Sale. We started our Sale with 8% less stock than last year. After a good start to the Sale period we now expect clearance rates to be ahead of last year.”
Next said its profit expectations for the full year remained in line with market expectations, of between £415 million and £435m.
Next said 2009 would be another challenging year. “We are again budgeting very conservatively, with negative like-for-like sales for the full year, and we believe that the first half will be particularly difficult. We expect Directory to remain less affected by the down turn than retail, and are currently budgeting for sales in Directory to be only marginally down for the full year.”
“We anticipate that consumer demand will remain weak during 2009, although we would caution against some of the more extreme economic forecasts. On the negative side, we expect falling house prices, unemployment and the fear of unemployment to continue to restrain spending. However there is some relief in sight for the consumer; food, fuel and energy prices are set to fall during the year and many will begin to benefit from reducing mortgage interest charges.”
Next warned that the weakness of Sterling would be a major issue for the retail sector this year. It said it anticipated significant upward pressure on prices and downward pressure on margins for the autumn season. It said the extent of these pressures would become more apparent when it negotiated and re-sourced its autumn stock.
For a full interview with Next chief executive Simon Wolfson on the prospects for 2009 click here.