Fashion chain Next say snow cost £22m sales
Fashion chain Next today said the snow cost it £22 million in lost sales as customers stayed at home during the key Christmas trading period.
The retailer estimated that 2.2% of the season's total sales were lost as a result of the snow, meaning like-for-like sales in its retail estate were down by 6.1% in the period between August and Christmas Eve.
While it also faced increased competitor discounting in the run-up to Christmas, Next said it remained on track to improve profits by as much as 10% in the year to the end of January.
Its online and telephone business, Next Direct, initially received a boost from the snow but this was offset nearer to Christmas when customers became worried that orders would not be delivered on time.
Sales at Next Direct were up 8.7% in the half-year, helping overall group sales to rise by 0.2% in the period.
Chief executive Simon Wolfson admitted that like-for-like retail sales were down by between 8% and 9% in the fourth quarter, mainly as a result of the bad weather.
But post-Christmas sales got off to a strong start, helped by the improved weather, he added.
"The end of season sale started well," he said. "There was a marked improvement in performance when the weather thawed out a bit."
The outlook for 2011 is uncertain as Next is unsure how consumers will react to the Government's budget cuts and price inflation.
The retailer expects the prices of goods it sells to rise by about 8% this year, partly as a result of soaring cotton prices and yesterday's VAT increase from 17.5% to 20%.
Mr Wolfson added: "The big uncertainty is the effect of rising prices on consumer demands, which will make it very difficult to know what 2011 will be like.
"We are working on the basis that prices will continue to rise for the whole of 2011."
Next expects its pre-tax profits for the year to January to be between £540 million and £555 million, which is in line with its previous guidance.
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