Clothing retailer Next trims profit forecast following lacklustre Christmas sales
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NEXT Plc trimmed its profit guidance for this year and felt the pain of customers' shift to the Internet, a warning sign for retailers hoping to end the year on a high note after months of struggle.
The clothing retailer cut its estimate for profit this year to £723 million (S$1,240 million) from £727 million. It reported a 1 per cent gain in Christmas sales though it extended the reporting period until after the holiday, muddying any comparison with last year's performance. For at least the past five years Next has reported Christmas trading to Dec 24.
The first retailer to report sales figures from the crucial period leading up to Christmas, Next is seen as an industry bellwether. The mixed performance will be a warning sign to other retailers such as Marks & Spencer Group Plc and Debenhams Plc.
Retailers discounted heavily in the days ahead of Christmas, rather than wait for Dec 26 to kick off sales. Next held back from the price slashing, but didn't cite it as a reason for the profit cut. Competitors that discounted more heavily will have to prove that extra sales made up for the thinner margins.
In 2018, British retail stocks suffered the biggest loss in 10 years. More performances like Next's may mean the worst is yet to come in 2019.
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Next shares fell 12 per cent in 2018, compared to a 27 per cent decline for the FTSE All-Share General Retailers Index. BLOOMBERG
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