Blaming heavy snowfall and hostile weather for possible sales loss worth £22 million, UK’s second largest fashion retailer Next said its earnings for the year will still be on track.
The FTSE 100 group company said on Wednesday that its earnings for the year will range between £540 million and £555 million, in line with the £535 million to £560 million earnings guidance issued by the company in November 2010.
The company operates more than 500 stores in the UK and Ireland. In a statement issued on Wednesday, it said sales at its high street stores fell by 6.1 percent in the five month period between August 1 and December 24. However, its mail order service – Next Directory catalogue and its online business recorded a sales growth of 8.7 percent over same period, last year.
‘Next’ issued a trading statement saying: “Directory initially benefited from the adverse weather conditions with people ordering from home rather than braving the cold”. But the overall effect on the catalogue and web based business was neutral since people stopped ordering before Christmas fearing the deliveries will be delayed.
The company is yet to issue earnings guidance for the year 2011 since it’s uncertain about the effect of government spending cut and VAT hike on demand.
Prices for Next’s products may be increased by about 8 percent to factor in rising input costs and additional taxes, it said.
Though the company is upbeat about the Next Directory business, its ‘best guess’ was that price hike will “moderately suppress” like-for-like store sales growth in 2011.