Future looks bleak for Nextas fashion stores struggle

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The Independent Online


High-street fashion chain Next is expected to deliver a gloomy outlook for the rest of the year when it unveils its preliminary full-year numbers on Wednesday.

Next's figures will come during a busy week of reporting for retailers, with Debenhams and Ted Baker issuing trading and full-year announcements.

Ian McDougall, retail analyst at Blue Oar Securities, is expecting little cheer from the high street. "Next's numbers have been well flagged up so it's all about the outlook for the rest of the year," he said.

"The prospects for the clothing industry this year and next aren't great, so I think they'll have a tough time ahead," he added.

"But the shares have been savagely discounted for a while now; I suspect much of that gloom is priced in already."

Investors and analysts will also scrutinise the ratio of Next's orders coming from retail stores and directory sales.

The company confirmed in January that it would meet consensus profit forecasts in the pre-tax range of £492m to £502m, versus £493m the previous year.

Shares in Next have tumbled during the past year, closing on Friday at just 1,154p – nearly half the 52-week high of 2,214p.

The precipitous fall in the company's share price has led to it being touted as a possible takeover target, with a recent note from the investment bank Credit Suisse describing it as a "rare opportunity" for Marks & Spencer to bolster its strategic prospects.

Meanwhile, Debenhams will issue a trading statement on Tuesday that is likely to show a modest decline in like-for-like sales over the period.

"Although the situation clearly isn't as bad as at Next, I don't think there will be a lot of positives coming out of Debenhams either," warned Mr McDougall.

Fashion chain Ted Baker is expected to reveal a modest increase in pre-tax profits to around £22m, from £20m in the previous year.

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