Warm Weather Deals Blow To Clothing Retailers

Written By Unknown on Kamis, 30 Oktober 2014 | 00.12

Shares in the UK's biggest clothing retailers have been hit after Next reduced its full-year profits guidance by £25m blaming unseasonably warm weather.

The country's second-largest clothing retailer, which had warned one month ago that a lack of typically autumnal conditions in October would result in lower profit expectations, said third-quarter sales still grew by 5.4%.

But the growth was almost half the 10% it had previously forecast as demand for winter wear remained weak.

It signals troubles for the wider sector in the run-up to the Christmas trading season because Next has largely outperformed its rivals for a decade.

Its share price fell 3% in early trading on the FTSE 100 while M&S and Debenhams also took hits to their values.

Official figures recently showed UK retail sales fell more than expected last month, with clothing demand hindered by the driest September since records began in 1910.

October is currently on track to be one of the warmest on record - if not the warmest.

Next, which trades from over 500 stores in Britain and Ireland, about 200 stores overseas and through its Directory internet and catalogue business, said: "Whilst a cool August meant that the season started well, this was more than offset by much weaker sales in September and October.

"Given the volatility of current trading and the very strong fourth quarter performance last year, we have moderated our expectations for the fourth quarter this year.

"We are now budgeting for full price sales in the final quarter to be within a range of -2% to +4%, with our central profit forecast for the year based on final quarter sales of +1%.

"We have reduced our central profit guidance by 3% to £770m (previously £795m)."

The forecast meant that much depends on the Christmas shopping season.

Next said it would update investors on its performance on 30 December.

While warm conditions are proving bad for clothing specialists, a number of retail sectors have benefited from the extended warmth.

The UK's strawberry industry has produced a record harvest of 60,000 tonnes since March and said it expects the growing use of polytunnels to enable crops for Christmas.

Coastal holiday resorts are expected to report stronger visitor numbers, with outside attractions reportedly proving popular too.


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