Next sales plummet

Group sales were down 3.9 per cent in the quarter to April 26. In stores, like-for-like sales in shops unaffected by new store openings were down 8.9 per cent, with total sales down 5 per cent. Next Directory sales slipped 1 per cent.

Next chief executive Simon Wolfson told Retail Week that cost increases in food, fuel, tax and mortgages would continue to affect customers’ willingness to spend. However, he added that better weather over the past 11 days had led to a marked improvement in the performance of the retail business and that the softer comparatives in the second quarter should lead to a better showing.

“Things aren’t worse than we thought they were going to be, but they are as bad as we expected,” Wolfson said. “We always knew things were going to be tough in the first quarter because the weather was so good last year, but hopefully it will reverse in the second quarter.”

“But it is important to look through the weather and the economic conditions are very tough, especially at the top end of the mass market where people have mortgages, cars and kids.”

Next said it expected sales over the first half to be down 3.5 per cent, with like-for-likes down 7 per cent, but it added that profits will be in line with market expectations. The retailer said it had planned for low demand and its stock position was better than last year.

Next has also tightened credit terms in its Directory business, meaning it had fewer bad debts than last year, although Wolfson admitted this was “definitely limiting sales growth” in that part of the business.