The Week Ahead: Next due to deliver update on Christmas trading

Boxing Day shoppers at a Next department store.
Photo: Joe Giddens/PA Wire

Boxing Day shoppers at a Next department store. Photo: Joe Giddens/PA Wire - Credit: PA

Fashion chain Next will be the first retailer out of the blocks with its festive trading update on Wednesday, giving an insight into how clothing firms fared over Christmas.

The figures will also shed light on whether Next was able to stage a much-needed recovery in its final quarter after a dire performance earlier in 2016.

Described by one analyst as its “annus horribilis”, 2016 was tough for Next as a shift in consumer spending saw sales tumble, with the firm delivering a series of profit warnings.

Third-quarter trading was particularly woeful, with high street sales falls worsening to 5.9%.

Boss Lord Wolfson had already warned that the last year would be the “toughest we have faced since 2008” following unhelpful weather and changes in consumer spending away from fashion towards eating out and travel.

He also cautioned that Next may have to increase its prices by up to 5% in 2017 as it faces surging costs from the Brexit-hit pound.

But he signalled potential for a turnaround over the all-important Christmas season after mild weather hit sales at the end of 2015-16.

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Matthew Taylor, retail analyst at Numis Securities, is pencilling in a 0.5% rise in Next’s fourth-quarter high street branded sales. He said: “We expect a positive fourth-quarter update, given the more seasonal weather and weaker comparisons, reflecting warm weather and poor Directory availability last time.”

Recent figures show that retail sales in the UK have held up well overall since the Brexit vote last June, although clothes sales still lag the wider sector.

After a welcome boost in October, when there was a surge in demand for winter clothing, fashion sales then fell back by 1.4% in November, according to official figures.

Since then, a CBI survey has suggested a more solid December, with sales of clothing performing strongly and helping the sector report “well above average” sales for the time of year.

Footfall figures for the Boxing Day sales were not so cheery, with the number of shoppers venturing out falling by 6.7% on a year earlier.

Clothes and footwear shops saw a 3.2% drop in footfall, according to figures published by Ipsos Retail Performance.