The Week Ahead: Next first to show its hand as festive reporting season begins
RETAIL bellwether Next will kick off the sector’s Christmas trading updates on Thursday after a crucial festive season for Britain’s high street.
Following a difficult year for the sector, many retailers have pinned their hopes on Christmas and the Boxing Day sales rush to offer a much-needed boost.
Next will give its closely-watched view on how the season went when it fires the starting gun on the round of Christmas sales updates on January 3.
The group’s sales figures will be keenly awaited given its prominence on the high street and also its well-established online offering.
Any comments on its Boxing Day performance, in particular, will be of interest as Next is one of the few fashion retailers that does not discount in the run up to Christmas and therefore attracts mammoth queues each year in the sales.
Rival John Lewis has already laid down the gauntlet with news that it notched up record online sales ahead of the group-wide clearance launch on Boxing Day, with sales on its website up 70% in the first hour.
The department store chain also said it saw “remarkable” sales in the final pre-Christmas week, up 26.5% year-on-year to �157.8 million in the week to December 22.
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But there have been warnings that for many shops, the festive sales flurry may have come too late.
Helen Dickinson, director general of the British Retail Consortium, said Christmas “hasn’t been a boom time for UK retailers” this year.
The last minute sales rush came even later as consumers remained cautious, although stores were helped by a final full shopping weekend before Christmas, which the calendar did not provide last year, she added.
Next is already under pressure to have improved online sales after its most recent trading update showed a worse-than-expected performance from the website.
The fashion and homewares chain, which has around 540 stores, said sales through its website Next Directory increased 5.6% in the quarter to October 27 against City expectations of 10% and 13.3% growth in the first half of the year.
Analysts expect Next Directory to show online sales improving to a 10% gain, although this will mark a far cry from the 16.9% seen a year earlier.
The market is also expecting a tough period for Next on the high street, with most retail experts pencilling in a sales fall of 2% for the Christmas period.
This would mark a reversal of the 1.1% rise seen in the previous three months.
Nick Bubb, independent retail analyst, said he expects Next to highlight “the usual divide between strong online and weak store sales”.
The Christmas sales reporting season begins in earnest the week after, with Debenhams, Mothercare, H Samuel parent Signet and Marks & Spencer among those posting figures.
Supermarket Morrisons is the first to report from the grocery sector on January 7, followed by Sainsbury’s and Tesco.
Philip Dorgan, retail expert at Panmure Gordon, warned that supermarkets were likely to report falling sales, with online growth stripped out, over the Christmas period.
The high and lows of the year can also be seen in share prices across the retail sector.
Next may be forecasted for a mixed festive season, but its shares have surged by 38% in 2012 as the group has weathered the double dip recession better than many.
It recently reported a 10% rise in pre-tax profits to �251 million in the six months to July and is expecting to deliver annual profits of between �590 million and �620 million.
By far the biggest share gainer of the year is Currys and PC World parent Dixons Retail, which has soared by 197% thanks to the demise of rival electricals chain Comet.
Fast-growing online fashion firm ASOS is another of the year’s share successes, up 112%, with babycare chain Mothercare following closely with a 108% rise and Debenhams up 98%.
Those suffering hefty stock market declines include entertainment retailer HMV, down 43% over 2012.
It recently warned it was in talks with banks over its future following worse-than-expected trading in the run-up to Christmas, with like-for-like sales plunging 10.2% in the 26 weeks to October 27.
Fashion group French Connection also suffered a dismal year on the stock market with shares down 27%.
Here is a list of upcoming retail trading updates:
January 3: Next
January 7: Morrisons
January 8: Debenhams, Domino’s Pizza, Dunelm, Mothercare, Signet
January 9: Restaurant Group, Sainsbury’s
January 10: Marks & Spencer, Tesco
January 15: Halfords, Spirit Pub
January 16: JD Wetherspoon, N Brown
January 17: Associated British Foods (Primark), Dixons Retail, Home Retail (Argos, Homebase)
January 23: WH Smith
January 29: Carpetright