Next counts cost of snow

(SHARECAST) – The snow lost Next an estimated £22m of full-price sales in the run-up to Christmas – about 2.2 percent of the season’s total sales – although the high street fashion chain remains on target to meet full-year profit forecasts.

Like-for-like sales between 1 August and 24 December tumbled 6.1 percent, worse than analysts expected. Sales at rival stores and limited stock availability on best-selling lines in the run-up to Christmas also hurt business.

Total Next brand sales rose 0.2 percent, at the bottom end of the group’s own zero to three percent guidance. Retail sales fell 3.1 percent, but Directory jumped 8.7 percent.

Despite the “very challenging” trading conditions before Christmas, Next still predicts profit for the year ending January 2011 will be £540m-555m, as expected and up about 10 percent on last year.

The “outlook for 2011 is uncertain” though. The company worries about the impact of government cuts on consumer spending, which is still unclear, and the effect of rising retail selling prices on overall demand.

Next also confirmed it will be raising prices by about eight percent because of the rising cost of raw materials like cotton, and yesterday’s hike in VAT to 20 percent.

“Our best guess is that price rises will moderately suppress like-for-like sales, though we believe this will be offset by the addition of profitable new retail space and continued growth of Directory’s online business,” it said.

The company promised a more detailed guidance for sales and profits for the year ahead with the full-year results, scheduled for 24 March.