You know the high street is in a bad way when any kind of drop in sales counts as a good result. But that seems to be the case with Next, which today reported that underlying sales fell by 6% in the first half of 2008 – and immediately saw its share price jump by 4%. After a nasty 9.4% slide in sales in the first quarter, analysts were worried that Next was in a downward spiral – so last quarter’s 2.4% drop (including a hike of nearly 6% in Next Directory sales) counts as a relatively healthy result.
On the other hand, Next was keen to play down any optimism – it pointed out today that the second quarter of 2007 was a miserable period for retailers thanks to the miserable summer weather (which left large parts of the country were underwater), so the comparison was not as tough as it was in the early part of the year. And it’s also refusing to change its gloomy outlook for the rest of 2008: ‘We can see no reason for any improvement in consumer spending,’ it moaned today. ‘Indeed, the economic risks appear to us to be on the downside’. Next reckons this is likely to result in a similar sales slide in the second half.
Still, let’s look on the bright side. At least things are looking at bit better for Next than they were three months ago. And if all else fails, there’s always chocolate. UK confectionery giant Cadbury’s also provided a beacon of hope for the beleaguered market by posting a 28% hike in profits for the first half of the year. Apparently Halls cough sweets enjoyed the biggest boost, with sales up 13%, while Trident gum sales were up 12% and Dairy Milk sales climbed another 9% (god bless that drumming gorilla).
Cadbury’s also seems to be in better shape than it was a few months ago: it’s finally managed to demerge its US drinks business, activist investor Nelson Peltz seems to be off its back, and it’s been busy trimming some fat to compensate for rising input costs. ‘We've had a strong first half, with revenue growth ahead of our goal range and margins significantly ahead of last year,’ Cadbury's CEO Todd Stitzer said today.
And it should be better positioned than most in the coming months: the way the economy’s going, our need for cheap Dairy Milk-style comfort eating is only going to increase...