The high street retailer said today that sales in its existing stores dropped nearly 3% in the last three-and-a-half months. Only a slight improvement in online sales ensured that overall sales for the period were about the same as last year.
Next chief executive Simon Wolfson blamed the impact of five interest rate rises, which is making our mortgage repayments much pricier than they used to be. As a result, Next Retail sales will apparently be somewhere between 1% and 3.5% lower than last year – despite its expensive store refurbishment programme.
Like most retailers, Next suffered as a result of the great British summer wash-out. But some of its competitors seem to have done a better job of rising out the storm.
Yesterday Stuart Rose said that like-for-like sales at M&S rose 2% last quarter, despite the ‘particularly volatile’ trading conditions. The man who famously said that ‘weather is for wimps’ admitted that the ‘extreme’ rainfall had been a factor, but was still able to report a 6.4% rise in overall sales. Its big winner was food sales – which just goes to show that we may not like shopping in the rain, but we certainly like eating.
Meanwhile Primark, the budget clothes store owned by Associated British Foods, continues to go like a train. Its sales soared 37% to £1.6bn in the year to September, with profits up 20% to £200m. And it’s expanding like mad – 32 new stores were opened last year, more than trebling its retail space. It’s become so popular that the opening of its Oxford Street branch almost caused a riot, with more than a million items flying off the shelves in the first ten days. In no time at all, it’s become the UK’s second biggest fashion retailer.
Next probably doesn’t consider itself as a direct competitor to Primark – but given that the store now dubbed ‘Primarni’ is not only cheaper than Next but also much cooler, Wolfson has a lot more than interest rates to be worrying about.