Chief executive Lord (Simon) Wolfson said it was unclear what the drivers of the uncertainty were, though the looming referendum on Britain’s membership of the European Union was the “least likely” factor.
He flagged rising homeware sales at the 540-strong chain as a possible sign that consumers were increasing their spending on non-clothing items.
Despite the downbeat outlook, the shares, which have been the worst-performing of Britain’s blue-chip stocks this year, shot to the top of the footsie leaderboard, up 187p, or 3.7%, to 5162p.
Cantor Fitzgerald said the stock had been oversold and although the latest sales figures fell short of expectations, they were probably not as bad as feared. RBC Capital Markets’ Richard Chamberlain said that “pent-up demand” should start to come through in May, providing some “short-term relief for Next’s trading”.
Peel Hunt analysts, however, said they were “not convinced” Next’s performance was purely down to external factors and claimed there were company-specific factors at work.
“We do not think that the consumer is retrenching in a major way: the income-tracking data suggests more cash in pockets and whilst consumer confidence isn’t quite what it was, it’s still positive.”
“Its ranging could be more punchy and the competitive advantage that the business had from its excellent logistics is now played out. So we don’t think it’s all about the market.”
Lord Wolfson said some of the problems that had plagued its Christmas period, such as stock availability, had since been put right.
