High street fashion retailer Next has lowered its expectations for annual profit after warm weather steered shoppers away from buying its winter ranges.
In a trading update this morning, Next said:
“On 30 September Next advised that we would reduce our sales and profit expectations if colder weather did not materialise during October. In the event October remained unseasonably warm and sales for the third quarter were up 5.4%, which compares to our original expectation of plus-10%.”
Final quarter sales are now expected to range between a decline of 2% and an increase of 4% while profits are expected to be up by around 1%. This is down from previous guidance of 4% growth.
Full year profits guidance has also been lowered, by around 3% to between £750m and £790m – down on the £775m-£815m range previously outlined although this is an increase of between 8% and 14% on last year.
Full year sales are also now expected to be up between 6 and 8%, down on the previous estimate of between 7 and 10%.
Next has said that after returning £361m of surplus cash to shareholders, it doesn’t plan to pay out further special dividends this year. Making £138m of share buybacks this year, it has the scope to buy more shares in the market.
Share prices were pushed down by 3% this morning following on from the warmer than expected October month and analysts at Investec have said the outlook into Q4 is not encouraging although currently, the retailer is still performing above the market.