Thursday, 4 May 2017

Next first quarter sales slide as consumers face real wage squeeze



Next has reported a 3% fall in full-price sales for the first quarter and scaled back its annual profit guidance as a squeeze on consumers takes its toll.
 
Shares plunged nearly 7% as the retailer warned that it faced a "challenging environment" with real terms wage growth close to zero - as pay increases stutter amid rising inflation.


Next's stores were the worst hit, with full-price sales down 8.1% in the 13 weeks to 29 April, while Next Directory, which includes online and catalogue sales, saw a 3.3% rise.


The performance was towards the bottom of the range of the company's expectations and prompted it to scale back the likelihood that profits might rise in the current financial year.


Next had previously set out guidance that earnings might climb by as much as 2.5% but it has now reduced this to 0.5%. At the lower end of the range it still expects they could fall by as much as 3.5%.
 
 
The retailer said: "The UK consumer environment remains challenging, particularly in the clothing and homeware markets, and real wage growth is now close to zero."


Next said that it had endured a poor February, with full-price sales down 4.6% with the decline narrowing to 2.2% over the course of March and April "assisted by the later, warmer Easter".


The group earlier this year reported its first profit fall since 2009 and warned of another tough year to come and the latest figures show its outlook has worsened even further.


Its trading update also weighed on rival Marks & Spencer, which saw shares slip by 3%.





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