Shares in Next took a hit yesterday after the high street fashion chain warned that the outlook remained uncertain in the run-up to Christmas as it reported a fall in comparable sales.
Like-for-like sales slipped 2.9 per cent in the 14 weeks to 3 November but the retailer has slowed down the rate of decline. Sales dropped 4.8 per cent in the previous six weeks. Next said trade showed a "significant improvement" in the latter part of the period.
"Trading patterns remain extremely volatile with good sales in September giving way to a disappointing October," Next added. "While we have made significant improvements to our product ranges, marketing and stores, we remain cautious about the consumer environment, with many customers now experiencing considerable year-on-year increases in their mortgage repayments."
Shares in the company fell 6.7 per cent making it one of the biggest fallers in the FTSE 100 Index. Total retail sales were flat due to new store space while sales at Next's online and mail order division Directory were up 1.2 per cent.
The company added that although the outlook is uncertain its forecast for the full year remains on track with like-for-like sales expected to fall in the range of -1 to -3.5 per cent.
In September, chief executive Simon Wolfson gave further details of the retailer's strategy of taking greater risks in its ranges in order to "put the magic back into Next". At the same time it launched its first major television advertising campaign to showcase its revamped collection. The company has upped its marketing spend by £18m, including an extra £2m on its window displays in the run-up to Christmas and has invested in updating its stores.
Andrew Wade, an analyst at Seymour Pierce with a buy rating on the stock, said: "This was a good performance, particularly considering the horror stories we have been hearing from thehigh street about October.
"There is some momentum building at Next, with the like-for-like trend going in the right direction and the merchandising, marketing and stores improving."
Yesterday, there was further gloom from the British Retail Consortium which reported annual sales growing at their lowest rate since November last year, with high street like-for-like sales for October rising by 1 per cent, down from a 3 per cent increase in September.