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Snow costs Next £22m, like-for-likes fall 6.1%

Snow in the run up to Christmas and heavy pre-Christmas discounting impacted Next’s sales by £22m, the retailer said.

Next said that like-for-like sales slumped 6.1% over the five months to Christmas Eve after the extreme weather cost the retailer 2.2% of its full-price sales during the season.

Retail sales, which fell 3.1% during the period, were also impacted by limited stock availability on best-selling lines in the key festive period, the retailer added.

Next’s Directory arm benefitted initially from the weather conditions when shoppers decided to shop from home rather than visit the high street, but in the immediate run up to Chrstimas concerns over whether home deliveries could be made put off further demand. Next said it believed the effect of the weather on Directory had been “neutral” overall. Sales over the five month period rose 8.7%.

Total Next sales excluding VAT during the period from August 1 to December 24 rose 0.2%, within the retailer’s previous guidance of flat to a 3% increase.

Next added that its end of season Sale had started well and that its clearance rates were in line with expectations.

Next reiterated that its profit forecast for the full year to the end of January 2011 remained within guidance issued in September and November. It estimated that full year pre-tax profit would be within the range of £540m and £555m, an increase of between 7% and 10% on last year.

Next said that the outlook for 2011 remained uncertain with the full impact of government cuts and the impact of rising retail selling prices on consumer spending still unclear.

Next reconfirmed that its prices would increase by about 8% this year as a result of higher input costs and the increase in VAT to 20% yesterday.

In a statement Next said: “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.”

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