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Next to reach profits target despite trading drop


Retail sales at Next fell 3.1 per cent between August 1st and December 24th but the retailer still expects to reach its full-year profit targets, it confirmed today.

Profit before tax for the year ending January 2011 is expected to fall within the range of £540 million to £555 million, representing a year-on-year increase of between seven and ten per cent.

Total brand sales during the five-month trading period to Christmas were up 0.2 per cent, which was only just within the retailer’s prediction of between zero and three per cent growth, largely due to adverse weather in November and December.

A statement released by Next explained: “Retail sales were significantly affected by extreme weather conditions and increased competitor discounting on the high street before Christmas.”

“We estimate that we lost £22 million of full price sales as a result of the snow (representing 2.2 per cent of the season’s total sales) leaving like for like sales down 6.1 per cent.”

Directory sales were much healthier finishing 8.7 per cent up in the period, with bad weather initially helping trading but negatively impacting on online sales as Christmas approached and customers began fearing failed deliveries.

Earnings per share will be between 15 per cent and 18 per cent ahead of last year if the expected profit targets are reached as now seems likely.

Like many retailers, Next expects prices to significantly increase in the new year due to rising commodity prices and sales to be affected as the government’s austerity measures take effect.

The company statement continued: “We reconfirm that our own prices will be increasing by circa eight per cent as a result of higher input costs and the rise in VAT.

“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.”

Published on Wednesday 05 January by Editorial Assistant

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