Next shares drop sharply on disappointing’ update

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(qlmbusinessnews.com via telegraph.co.uk – – Wed, 1st Nov 2017) London, Uk – –

Shares in Next dived more than 8pc in morning trading after the high street bellwether warned “extreme volatility” made it hard to forecast sales ahead of its key Christmas trading period.

“Week by week sales volatility makes it very hard to determine any underlying sales trend,” the fashion retailer said as it posted sales growth of 1.3pc in its third quarter.

Next said that the 0.3pc decline in sales in the year-to-date was “the most reliable guide” to the rest of the year.

“Sales performance has remained extremely volatile and is highly dependent on the seasonality of the weather,” the retailer added, adding that cooler temperatures boosted sales of warm clothing in August and September.

Excluding discounts, in-store sales dropped 7.7pc in the three months to October 29, while sales in its online Directory business climbed 13.2pc.

Next reaffirmed its profit guidance for the year, saying it expects to deliver pre-tax profits between £692m-£742m, compared with its previous forecast of £687m-£747m.

Neil Wilson, senior market analyst at ETX Capital, said: “Next better hope that British shoppers are a little less fickle than the weather, because sales performance is so volatile the firm has no idea what to expect over the vital Christmas trading period.

“This is a worry, although there does seem to an improving trend in sales growth throughout the year that may calm nervous investors.”

In March, Next reported its first drop in annual profits since the financial crisis, a 3.8pc fall to £790.2m.

Next shares sank to £45.08.

By Jack Torrance