Like-for-like sales decline 8% but Directory sales jump 17% in three months to 29 October
Next will expand its high street presence, said chief executive Simon Wolfson. Photograph: David Moir/Reuters
Store group Next said booming sales at its home shopping arm had saved the day as tough economic conditions led to consumers deserting the high street.
Like-for-likes at its 500 stores declined by an estimated 8% in the three months to 29 October but that was offset by a surge in orders at Directory, where sales jumped 17%. The disparate performance saw group sales finish up 3.3%. Its chief executive, Simon Wolfson, suggested the warm autumn knocked 1-2% off clothing sales but it was difficult to gauge whether it was the weather or the economy. "With everything that is going on out there, it is very hard to say," he said.
Retailers are facing a tough climate as disposable incomes are squeezed by higher food and fuel bills. Liberum analyst Simon Irwin said the major clothing chains could face a stormy period before Christmas because the warm weather has left them sitting on too much stock, which could result in heavy discounting.
Store chains with strong internet businesses are proving more resilient in the downturn as shoppers research or book purchases online out of convenience as well as the opportunity to save money. While official retail sales rose only 0.6% year-on-year in September, online sales surged 15%, according to industry body IMRG. Although Next Directory generates less than a third of group sales, it contributed 40% of group profits last year.
Next confirmed annual profits would be £550m-£585m, sending its shares up nearly 4%, or 96p, to £26.53.
While some chains are reducing their high street presence, Wolfson said Next is expanding, with 300,000 sq ft of space opening this year. He said that shopping patterns were changing but internet and stores go "hand in hand". Many customers went to shops to return and collect goods ordered online, he added.
Wolfson, a Tory peer who recently offered a £250,000 prize to the academic who can devise the best way for a country to make an "orderly exit" from the euro, said the UK economy was "flatlining" but compared with the global picture "flatlining wasn't a bad result". He expects consumer spending to remain weak in the UK but, while some retailers are calling for a stimulus to boost spending, he said the government was right to stick to its plans to slash the deficit: "It's all very well saying 'we want help'. Everyone wants the government to spend money on their little sector, but the reality is that any money the government [spends] has in one way or another got to come from the taxpayer."
Like-for-likes at its 500 stores declined by an estimated 8% in the three months to 29 October but that was offset by a surge in orders at Directory, where sales jumped 17%. The disparate performance saw group sales finish up 3.3%. Its chief executive, Simon Wolfson, suggested the warm autumn knocked 1-2% off clothing sales but it was difficult to gauge whether it was the weather or the economy. "With everything that is going on out there, it is very hard to say," he said.
Retailers are facing a tough climate as disposable incomes are squeezed by higher food and fuel bills. Liberum analyst Simon Irwin said the major clothing chains could face a stormy period before Christmas because the warm weather has left them sitting on too much stock, which could result in heavy discounting.
Store chains with strong internet businesses are proving more resilient in the downturn as shoppers research or book purchases online out of convenience as well as the opportunity to save money. While official retail sales rose only 0.6% year-on-year in September, online sales surged 15%, according to industry body IMRG. Although Next Directory generates less than a third of group sales, it contributed 40% of group profits last year.
Next confirmed annual profits would be £550m-£585m, sending its shares up nearly 4%, or 96p, to £26.53.
While some chains are reducing their high street presence, Wolfson said Next is expanding, with 300,000 sq ft of space opening this year. He said that shopping patterns were changing but internet and stores go "hand in hand". Many customers went to shops to return and collect goods ordered online, he added.
Wolfson, a Tory peer who recently offered a £250,000 prize to the academic who can devise the best way for a country to make an "orderly exit" from the euro, said the UK economy was "flatlining" but compared with the global picture "flatlining wasn't a bad result". He expects consumer spending to remain weak in the UK but, while some retailers are calling for a stimulus to boost spending, he said the government was right to stick to its plans to slash the deficit: "It's all very well saying 'we want help'. Everyone wants the government to spend money on their little sector, but the reality is that any money the government [spends] has in one way or another got to come from the taxpayer."
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