High Street darling Next has warned that the UK’s Indian summer would cost it £25 million in lost profits, triggering fears over similar bad news among retail rivals.
Shares in Next, Marks & Spencer, Debenhams, SuperGroup and Primark owner Associated British Foods came under pressure as analysts predicted other retailers will be forced to follow suit with their profit warnings.
Independent retail analyst Nick Bubb suggested: “If Next have been mildly discomfited by the amazingly mild October weather, we suspect that the likes of M&S and Debenhams have had bigger problems.”
Next revealed a strong August was wiped out in September and October as shoppers failed to snap up the typical autumn favourites like jumpers and coats. Sales during September fell around £18 million compared with a year earlier.
Chief executive Lord Wolfson, pictured, refused to panic and said he had no plans to launch one-off sales or discount events to shift the extra stock, unlike rivals Debenhams and M&S, which continue to struggle to wean customers off heavy discounting.
He told The Independent: “We will continue with our strategy and any items we can’t sell now, will go into our post-Christmas sales. We wouldn’t start discounting before then.” Sales in the three months to October 25 still rose 5.4 per cent.
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However, Next had predicted sales would shoot up around 10 per cent. Pre-empting the disappointment, Wolfson heralded today’s warning a month ago, saying if the warm weather continued in October then sales and profits would be down.
Some in the City suggested he was being too cautious, but Wolfson said he was pleased to be proved right in making the announcement, albeit with a £25 million drop in expected profits and shares off 1 per cent, or 75p, to 6360p.Reuse content