Next reports disappointing Christmas after mild autumn

High street chain Next blamed unseasonably warm weather for a “disappointing” performance in the run-up to Christmas as it posted a fall in store sales and sharp slowdown in its Directory business.

Full-priced sales advanced 0.4 percent in the two months ended December 24, the U.K.’s second-largest retailer said in a statement Tuesday.

Full-price sales for the financial year to date are up 3.7% ahead of last year, below previous guidance of 4% to 6%, said Next, whose financial year finishes at the end of January.

Our revised central forecast for full year Group Profit is now £817m, though this might increase or decrease by £7m depending on trade in January.

The company put the disappointing performance in the latest period down to the warm weather the United Kingdom experienced in November and December, but it was also honest about other mistakes it made and warned that its Directory business was facing tougher competition.

It added: “Specifically, we believe that Next Directory’s disappointing sales were compounded by poor stock availability from October onwards”.

“However, good control of margins, costs and stock, along with healthy clearance rates means that we expect profits for the full year to remain within our profit guidance of £810 million to £845 million”, it added.

The retailer also warned that the online shopping market was “getting tougher” as competitors catch up with Next’s market-leading online service.

Despite the rough Christmas trading season, the retailer has declared a special dividend of 60p per share, to be paid next month, which represents about a quarter of the firm’s expected cash surplus for the coming year. Marks & Spencer fell 1.3 per cent, while department-store chain Debenhams slid 2.1 per cent.

The warmest December on record is expected to have led to more sales pain for M&S in its general merchandise and clothing arm, with the City pencilling in a 2% drop in the division over its third-quarter.