Next shares fall despite online sales offsetting store woes

image copyrightNEXT

Next has once again seen growth in online sales offset a decline in its shops, amid what it called "extremely volatile" trade in the third quarter.

The fashion retailer's website sales rose 13.2% in the three months to October, but in-store sales fell 7.7%. Overall, total sales rose 1.3%.

This continued the trend from the first six months of 2017 with online sales offsetting a fall in shop purchases.

Next's shares fell by more than 7% in early trading after the announcement.

A Next spokesman told the BBC that the company's results "mirrored the national trend" as more consumers moved online and that all retailers were having similar experiences.

In its trading update, Next predicted that sales in the fourth quarter would fall by 0.3% - the same figure by which its sales have fallen so far this year.

It said its prediction for the rest of the year "may seem pessimistic compared with our performance in the third quarter, particularly as we believe that our product ranges have continued to improve".

But it said the third quarter last year was very weak with a fall in sales of 3.5%, while the Christmas period only fell by 0.4%.

'Rising expectations'

Next said its sales performance in the third quarter had been "extremely volatile" and was "highly dependent on the seasonality of the weather".

So far in 2017, the retailer's online sales have gone up by 9.4% with purchases in-store falling by 7.7%.

The company said that clearance rates in its summer end-of-season sale were lower than last year and that trend had continued into the third quarter.

Sofie Willmott, senior retail analyst at GlobalData, said: "Next's first positive results in over a year are not enough to signal a long-term reliable turnaround for the High Street stalwart.

"Though the online channel continues to outstrip store performance, the rate of growth continues to slow year-on-year.

"Next must continue to invest in its online platform to meet rising consumer expectations."

Neil Wilson, a senior market analyst at ETX Capital, said: "Next had better hope that British shoppers are a little less fickle than the weather, because sales performance is so volatile the firm has no idea what to expect over the vital Christmas trading period.

"This is a worry, although there does seem to be an improving trend in sales growth throughout the year."

More on this story