Next shares drop as Q4 results disappoint

Next has reported on Q4 trading for the 54 days ended 24th December, advising of a 0.4% decline in full-price sales for the period.

Total sales, including markdown sales, for the year to date were up +0.4% on 2015.  Full price sales for the year to date were down -1.1% on last year.

See the full publication here. 

The retailer stated that its annual profits will likely be £792m, towards the lower end of its £785m-£825m forecast.

By early afternoon on Wednesday, Next's shares had dropped over 14%.

In November last year, Next reported a difficult third quarter and, in August, advised that it would likely have to impose price rises of around 5% in 2017.  

Next said: "The year ahead looks set to be another challenging year; therefore we are preparing the company for tougher times," adding that it was "well placed to weather a downturn in consumer demand".

Next's trading statement also made reference to 'exceptional levels of uncertainty in the clothing sector' and 'little visibility of the approach the UK government will be taking to Brexit'.  

Analyst View

Martin Lane, a representative at www.money.co.uk, gave us his view:  

“Next are having a really hard time of it. Last year they cited the bad weather as the cause for their problems and now it’s the performance of the pound – the problem with these excuses is other clothes retailers are doing very well so they can’t keep blaming external factors.  

“Next have their work cut out if they are going to survive and you could argue they are trying to be too many things to too many people. They’ve tried to appeal to an audience too turned off to tune in and in doing so have lost some of their hardcore fans. They need to seriously look at their business model because other high street shops like Zara operate very differently and are much quicker to get their newest designs in stores.”   

Source : Insight DIY 

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