Next warns of 'challenging' 2017 after Christmas downturn
Share price plummets 12 per cent in early morning trading following 0.4 per cent drop in sales over festive season
High street fashion chain Next has warned that 2017 will be "challenging" after reporting a downturn in sales over the festive period.
Full-price sales year-on-year were down 0.4 per cent in November and the first 24 days of December, said the retailer, while annual profits for 2016 are now expected to be £792m, the lower end of previous forecasts of between £785m and £825m.
The news caused Next's share price to fall 12 per cent as trading opened in London today.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
The company said: "The year ahead looks set to be another challenging year; therefore we are preparing the company for tougher times."
It added: "The fact that sales continued to decline in quarter four, beyond the anniversary of the start of the slowdown in November 2015, means that we expect the cyclical slow-down in spending on clothing and footwear to continue into next year."
It also warned prices could rise by up to five per cent because of the fall in the value of the pound following the Brexit vote, something which would "depress sales revenues by around 0.5 per cent".
Sales for the next 12 months are expected to lie between a fall of 4.5 per cent and a rise of 1.5 per cent, while profits are predicted to fall to between £680m and £780m.
There is "one bright spot" for the retailer, says Retail Week: sales from its Next Directory catalogue increased by 5.1 per cent.
Retail Week adds that the company has "historically outperformed the High Street", but says its performance has "faltered in recent quarters".
Next, however, said it was "well-placed to weather a downturn in consumer demand".
It added: "Our balance sheet remains robust and our net debt is forecast to close the current year at around £850m, this is more than covered by the value of our Directory debtor book, which will be approximately £1bn at the end of January 2017."
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
What are Trump's plans for public health?
Today's Big Question From abortion access to vaccine mandates
By Devika Rao, The Week US Published
-
GOP's Mace seeks federal anti-trans bathroom ban
Speed Read Rep. Nancy Mace of South Carolina has introduced legislation to ban transgender people from using federal facilities
By Rafi Schwartz, The Week US Published
-
US charges Indian tycoon with bribery, fraud
Speed Read Indian billionaire Gautam Adani has been indicted by US prosecutors for his role in a $265 million scheme to secure solar energy deals
By Peter Weber, The Week US Published
-
Why au pairs might become a thing of the past
Under The Radar Brexit and wage ruling are threatening the 'mutually beneficial arrangement'
By Chas Newkey-Burden, The Week UK Published
-
Brexit: where we are four years on
The Explainer Questions around immigration, trade and Northern Ireland remain as 'divisive as ever'
By The Week UK Published
-
Is it time for Britons to accept they are poorer?
Today's Big Question Remark from Bank of England’s Huw Pill condemned as ‘tin-eared’
By Chas Newkey-Burden Published
-
Is Brexit to blame for the current financial crisis?
Talking Point Some economists say leaving the EU is behind Britain’s worsening finances but others question the data
By The Week Staff Published
-
Labour shortages: the ‘most urgent problem’ facing the UK economy right now
Speed Read Britain is currently in the grip of an ‘employment crisis’
By The Week Staff Published
-
Will the energy war hurt Europe more than Russia?
Speed Read European Commission proposes a total ban on Russian oil
By The Week Staff Published
-
Will Elon Musk manage to take over Twitter?
Speed Read The world’s richest man has launched a hostile takeover bid worth $43bn
By The Week Staff Last updated
-
Shoppers urged not to buy into dodgy Black Friday deals
Speed Read Consumer watchdog says better prices can be had on most of the so-called bargain offers
By The Week Staff Published