Retailer Next stated its catalogue business helped its profit performance, despite the fall in consumer confidence. The company's chief executive Lord Wolfson stated: “I do think the consumer has weakened and that it was difficult to extrapolate theeffects of the unusually warm weather on sales in its stores."
He further told the Financial Times that consumers were feeling the full effect of price rises – in fuel, food and utility costs – outpacing wage growth, and this was holding back their spending. “We are pretty much at the peak of inflationary pressure at the moment,” he said. “Cost inflation and wage inflation, that difference is probably at its maximum at the moment. The increase in that pressure is holding consumer spending back more than any other factor.”
He also forecast that consumer confidence was unlikely to change ahead of the crucial trading period in the run-up to Christmas.
“I can’t see why Christmas should be very much different . . . from the environment we are in today,” he said. “I don’t think there is a special Christmas consumer environment, which suddenly magically changes. In terms of the pressure on people’s wallets, I can’t see a change between now and Christmas.”
Analysts estimated that Next’s sales from stores open at least a year fell by about 7 per cent, excluding VAT, in the three months to October 29. Lord Wolfson said like-for-like sales from Next’s stores were 2-2.5 percentage points weaker in the third quarter compared with the first half. But a 16.9 per cent increase in Next Directory sales offset a 3.3 per cent fall in Next retail sales year-on-year, in the third quarter. Total Next brand sales rose 3.3 per cent.
Next also maintained its profit forecast, narrowing its guidance on full-year pre-tax profit from between £545m and £590m to between £550m and £585m.
Lord Wolfson said he expected no further increases in Next’s clothes prices in the spring-summer season, and this trend was expected to continue in the second half of next year. However, this did not necessarily mean a fall in clothing prices.
Image: Next Directory