Next marks slowdown in Xmas sales
Next is normally one of the better performers, and its tepid figures hint at worse to come from its rivals.
It blamed the unusually warm weather in November and December for a slowdown that could hit the wider sector.
Full price sales in the 60 days from 26 October to 24 December rose 0.4%, compared with company guidance for second half growth of 3.5-7.5% and third quarter growth of 6.0%.
John Lewis and Marks & Spencer report figures this week.
Ketan Patel, associate fund manager at EdenTree, said: “Next’s trading statement, citing mild weather as the culprit for poor performance does not augur well for the UK retail sector.
“Despite the poor quarter, the company has confirmed its full year guidance which should reassure long-term investors, who have been rewarded with double-digit returns over the past quarter of a century.
“At a macro level, the low inflation environment, due to lower energy and food prices, coupled with a modest increase in wage growth – all leading to greater disposable incomes for the UK consumer.
“The management team have via strong capital discipline delivered outstanding long-term returns for shareholders – Next shares have returned (on a total return basis) 34.5% annually vs 6.0% for the FTSE AllShare over the last 5 years. As a result Next stands currently as one of the largest holdings in both the Amity UK and UK Equity Growth Funds.”
Markets in Asia were calmer after yesterday’s sell-off, but remain volatile. The FTSE 100 closed up 43.8 points at 6,137.24.