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LONDON, United Kingdom — Next Plc started the Christmas reporting season for U.K. clothing retailers on a sour note by disclosing revenue that missed analysts' estimates and saying profit will come in at the bottom of its forecast range, adding to concern of weak holiday sales across the industry.
Full-priced sales advanced 0.4 percent in the two months ended Dec. 24, the U.K.’s second-largest retailer said in a statement Tuesday. Analysts expected growth of 5.8 percent, according to the median of 17 estimates. Next said it expects pretax profit will be about 817 million pounds ($1.2 billion) for the financial year ending this month. Its forecast range is 810 million pounds to 845 million pounds.
“The disappointing performance in the fourth quarter was mainly down to the unusually warm weather in November and December," the company said. “In addition, the online competitive environment is getting tougher.”
The sales miss is a departure from Next’s typically stellar performance and adds to concern that unseasonably warm weather weighed on profit at the U.K.’s fashion retailers. Next stuck to its mantra of not discounting before Christmas, preserving profitability in the face of pre-holiday price cuts by competitors including Marks & Spencer Group Plc. Promotions by U.K. retailers reached their highest level since 2008, according to consultancy firm Deloitte.
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Earnings could fluctuate by as much as 7 million pounds depending on January trading, Next also said.
By Sam Chambers; editors: Matthew Boyle, Thomas Mulier.
