Next chief executive Lord Wolfson has admitted self-inflicted wounds as well as warm December weather were behind the profits alert which sent the firm’s shares into free-fall.
So while a cold(ish) autumn boosted Next’s fortunes, mild weather in November and December did not work out so well. That’s why in-store full price sales were down 0.5% in the period from October 22 to December 24. While it’s easy to pin things on the weather, the company held its hands up for worse-than-expected growth in its Next Directory online business.
‘We would not want to allow difficult trading conditions to mask any mistakes and challenges faced by the business,’ the statement said. ‘Specifically, we believe that NEXT Directory’s disappointing sales were compounded by poor stock availability.’ It also admitted that online competition is ‘getting tougher.’
The graph does make a good point, but it wasn’t enough to persuade investors to keep the faith. Next was the biggest faller in the FTSE 100 this morning as its share price dipped 5.5% to 6,796p, a 12-month low.
On the plus side, Next said it expects profits to be in line with previous expectations – partly thanks to ‘good control of margins, costs and stock’. That somewhat validates its decision to shun the Black Friday discount frenzy that other retailers got sucked into.
‘Next has proved once again that holding its nerve delivers results,’ said James McGregor, partner at consultants Retail Remedy. ‘[Chief executive] Lord Wolfson is known to underplay performance, and warns of future challenges, but Next consistently deliver, remain unflustered, and stay true to its core customer.’
In some industries a wobbly performance by a competitor would be music to a company’s ears, but these figures are likely to send shivers along the high street. Marks & Spencer, which will publish its latest figures on Thursday, has been singled out as a particularly likely loser from Christmas 2015 and its shares were down more than 1% this morning.
This week Ladbrokes was offering odds of 4/5 on M&S boss Marc Bolland getting the boot this year. If its festive figures are drastically worse than Next’s then those odds could shorten sharpish.
Christopher B. Taub