Next sales hit by rain, not recession, says Wolfson
Lord Wolfson, the chief executive of Next, said the UK falling into a double-dip recession will have no impact on consumer confidence but admitted April's rain had hit its sales.
He made his comments as the fashion chain posted a decline in first-quarter retail sales yesterday, although strong online growth helped it reaffirm profit guidance of up to £610m for this year.
Lord Wolfson played down the effect of the UK economy shrinking in the first three months of this year by 0.2 per cent for the second consecutive quarter, which is the definition of a recession. "The technicality of a recession doesn't influence consumer sentiment," he said.
"No one thinks that because we are in technical recession 'I will not go out and buy a new pair of trousers'. My guess is that the [economic] numbers will be revised upwards anyway."
Next's retail sales in its 500-plus stores in the UK and Ireland fell by 3.9 per cent over the 13 weeks to 28 April, which analysts equated to a fall of between 7 per cent and 8 per cent on a like-for-like basis.
The group, which launched a new fashion range by the former Spice Girl Geri Halliwell in February, said it been up against tough, comparable sales in the same period last year, which was boosted by the "exceptionally warm weather and Royal Wedding".
The sustained rain in April had "definitely hindered our sales", said Lord Wolfson. "You can see that on a day-to-day basis and the difference when the sun comes out".
He said womenswear sales had seen the biggest impact from April's rain but added: "Unless the [poor] weather continues for a prolonged, three to four-month period, people tend to buy their summer clothes."
Boosted by new stores and its barnstorming Directory catalogue and online business, Next's total sales rose by 1.4 per cent
Simon Chinn, a consultant at Conlumino, said: "While last month may have been a complete wash-out and further dampened sales of its spring/summer collection, the outlook for the quarter ahead looks more encouraging with the upcoming Jubilee and summer sporting events likely to provide some boost."
Next Directory, which delivered operating profit of £262.6m last year, grew revenues by 11.8 per cent over the quarter. When online is added to its underlying sales, as it is with retailers such as Marks & Spencer, Next's like-for-like sales fell by an estimated 1.5 per cent over the 13 weeks.
Next forecast that if its total sales rise by between 1 per cent and 4 per cent this year its profits will be as high as £610m this financial year. Its shares rose 75p to 2,971p yesterday.
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