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Next warns on outlook as sales fall Next warns on outlook as sales fall
(about 1 hour later)
Next has warned that this year will be "challenging" as it reported a fall in sales in the run-up to Christmas.Next has warned that this year will be "challenging" as it reported a fall in sales in the run-up to Christmas.
The retailer said full-price sales fell by 0.4% in the 54 days to 24 December, with annual profits now set to be at the low end of expectations.The retailer said full-price sales fell by 0.4% in the 54 days to 24 December, with annual profits now set to be at the low end of expectations.
The firm forecast full-year profits would be £792m, compared with previous guidance of £785m-£825m.The firm forecast full-year profits would be £792m, compared with previous guidance of £785m-£825m.
Next said sales in 2017 could be hit as rising inflation erodes earnings growth and squeezes consumer spending.Next said sales in 2017 could be hit as rising inflation erodes earnings growth and squeezes consumer spending.
Next shares fell by 12% at the start of trading in London.Next shares fell by 12% at the start of trading in London.
"The year ahead looks set to be another challenging year; therefore we are preparing the company for tougher times," the company said."The year ahead looks set to be another challenging year; therefore we are preparing the company for tougher times," the company said.
It said the price of clothing could rise "by no more than 5%" following the fall in the value of the pound last year. It added that this would "depress sales revenue by around 0.5%".It said the price of clothing could rise "by no more than 5%" following the fall in the value of the pound last year. It added that this would "depress sales revenue by around 0.5%".
As a result, it said it was budgeting for full-price sales growth in the year to January 2018 within the range of a fall of 4.5% and a rise of 1.5%.As a result, it said it was budgeting for full-price sales growth in the year to January 2018 within the range of a fall of 4.5% and a rise of 1.5%.
If it came in at the mid-point of a fall of 1.5%, that would be "marginally worse" than the current year's performance, it added.If it came in at the mid-point of a fall of 1.5%, that would be "marginally worse" than the current year's performance, it added.
Next is already predicting a fall in profits for next year, saying it expects to make between £680m and £780m.Next is already predicting a fall in profits for next year, saying it expects to make between £680m and £780m.
However, the retailer said it was "well placed to weather a downturn in consumer demand".However, the retailer said it was "well placed to weather a downturn in consumer demand".
'Gamble'
The figures for the 54 days to Christmas Eve revealed sales in stores fell by 3.5%, while Next Directory sales rose by 5.1%.The figures for the 54 days to Christmas Eve revealed sales in stores fell by 3.5%, while Next Directory sales rose by 5.1%.
In its statement, the company said despite a "difficult season" it went into its end of season sale with 3% less stock than last year, but it sold 7% fewer products than 12 months ago.
"Next took a gamble on keeping their sales full price in the run-up to Christmas, it's what they usually do, and they usually use the sales to try and get people into the shops afterwards," said Kirsty McGregor of Drapers magazine.
However, she said, that strategy did not seem to have paid off this year.
"I think what we're seeing there... is an underlying move away from spending so much money on clothing and footwear. People seem to be spending more money on going out and on technology, things like that."