It’s been a disappointing start to 2017 for high-street bellwether Next (NXT). Shares there plunged 13 per cent in response to fourth-quarter numbers which showed full price sales over the 54 days ended 24 December 2016 falling 0.4 per cent.
Despite being a distinct improvement on the third quarter, with bosses saying seasonal sale periods have been better controlled, the company reported that turnover in the final end-of-year sale was down 7 per cent. All in all, Next was forced to revise its mid-point pre-tax profit guidance for the year down to £792m, below Peel Hunt’s last estimate of £800m. What's more, that figure could move by another £7m either way depending on how successful January proves to be.
This sheds some light on chief executive Lord Wolfson’s strategy to pursue higher full-priced sales to protect margins and profits from a higher cost base this year - itself a result of weaker sterling against the US dollar. Efficiency measures have already been made in Next's supply chain, particularly regarding labour costs, but price rises are on the cards too.
