UK: Next issues caution after H1 sales slump
- Same-store sales dip 1.5%
- Directory up 7.8%
- Total sales up 3.1%
Clothing retailer Next said in a trading statement today (4 August) that same-store sales fell 1.5% in the first-half, and warned of increased selling prices and cooling demand ahead.
But like-for-like sales including its direct division increased 1.7%, with directory sales growing 7.8%. And the company's sales total branded sales for the 26 weeks to 31 July 2010 grew 3.1%.
However, Next said that a combination of higher cotton prices, capacity tightening and a lower dollar costing rate meant it would experience higher input prices in the first half of 2011.
The company aims to mitigate some of the effects through the development of new sources of supply and more rigorous negotiation.
It said the combination of increasing cost prices and the January 2011 VAT rise are likely to push up clothing retail prices in spring 2011.
Next estimates that selling prices may rise between 5% and 8%.
Looking ahead, it expects group operating profit for the first-half to increase around 15% compared to last year.
The retailer also warned today that demand will slow in the second half.
According to its outlook for the full-year, the company expects profit before tax to be in the range GBP535m to GBP560m, representing an increase over last year of 6% to 11%.
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