Next Plc's year to Dec. 24 total sales down 1.1%

Next Plc said its total sales for the year to Dec. 24 were down 1.1%, and in the 54 days to the same date were down 0.4%.

It sees group profit before tax at £792m on central guidance, from a previously guided range of £785m-£825m.

On an annual basis Next Directory sales rose 3.6%, while on the 54-day period they rose 5.1%.

Next Retail sales sagged 4.3% in the 12 months to Dec. 24, while in the 54 days they fell 3.5%.

"Despite a difficult season, stock for our end-of-season Sale was well controlled and down -3% on last year," the company said.

"However, sales in the end-of-season Sale are down -7% on last year; the cost of the lower clearance rates is in the order of £3m.

"Our revised central guidance for full year Group profit is £792m, this may increase or decrease by £7m depending on trade in January."

OUTLOOK

"The fact that sales continued to decline in quarter four, beyond the anniversary of the start of the slowdown in November 2015, means that we expect the cyclical slow-down in spending on clothing and footwear to continue into next year," Next said in a statement.

"In addition to this effect, there are two further factors which may depress sales. We may see a further squeeze in general spending as inflation begins to erode real earnings growth. As previously indicated, following the devaluation of the Pound, we expect prices on like-for-like garments to rise, but by no more than 5%. We expect that this will depress sales revenue by around 0.5%.

"In these circumstances, we are budgeting for NEXT Brand full price sales growth (at constant currency) in the year to January 2018 to be between -4.5% and +1.5%. The mid-point of this range is -1.5%, which is marginally worse than the current year's performance.

"Overseas sales will be boosted by the devaluation of the Pound which means that we expect total reported full price sales to be around +1% better than the constant currency numbers detailed above.

"In the year ahead we face a number of inflationary pressures in our cost base.

"The National Living Wage, the national business rates revaluation, Apprenticeship Levy and energy taxes will add around £13m to our cost base. General inflation in wages and other non-product costs look set to increase by an additional £6m.

In addition we intend to add around £10m to our cost base in order to improve our website systems and online marketing."