Next sales warning spooks City as shares tumble 7%

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The Independent Online

The retail giant Next sent alarm bells ringing across the high street yesterday when it warned that sales in August and early September had been "disappointing", which prompted shares to fall 7 per cent.

The sales slowdown at the fashion and homewares retailer took the City by surprise as it has been one of the retail sector's most reliable performers during the downturn, though there was no change to Next's full-year profit guidance.

This followed Next delivering double-digit profit growth in its first half to July, as its online and catalogue business continued to power ahead.

Lord Wolfson, the chief executive of Next, said the Olympics had led to lower footfall in stores and damped trading online, as had the "unusually warm" weather over recent weeks. "Generally, we think it [the Games] was not good for clothing or online. People were engaged watching TV rather than ordering online," he said.

While shares in Next have soared this year, they tumbled by 259p to 3,320p yesterday.

Its comments on trading had a knock-on impact on rivals, with Debenhams and Marks & Spencer falling by more than 2 per cent. Neil Saunders, the managing director at Conlumino, said: "Next is likely to have fared comparatively better than others over the period."

Lord Wolfson also suggested that footfall on the high street had been hit by more people booking holidays abroad after the rain earlier in the summer. "The country did feel quite empty in the last two weeks of August and first week of September," he said.

Next, which has 536 stores, grew pre-tax profits by 10.2 per cent to £251.3m over the half-year to 28 July, 4 per cent ahead of City forecasts.

Next's total revenues grew by 4.8 per cent to £1.64bn, as flat retail sales in stores were offset by online performance.

Next is rolling out its online service to same-day, Sunday and evening deliveries in November, extending next-day-delivery deadlines to 10pm.