Next sales add to High Street gloom

RENEWED gloom engulfed the retail sector today as fashion group Next revealed a bigger-than-expected slump in sales, raising fears of even worse news when Marks & Spencer updates the market next week.

Underlying sales at Next have tumbled by 6.3% over the past 15 weeks, a sharp acceleration on the 3.5% downturn in the first seven weeks of its new financial year.

Stripping out the impact of new store openings on existing outlets, the fall was 3.2%, up from 0.9%. The contribution from new stores saw total sales ahead by 6% while the Directory mail order operation's sales rose 8.1%.

Next has been one of the High Street's brightest stars in recent years but has been unable to withstand the sudden spending squeeze. The shares tumbled 27p to 1478p on news of the worse-than-expected performance.

Trading was active ahead of the figures, with speculators betting the shares would lose ground. As much as £300m of stock is thought to have been sold short in recent weeks, as traders gambled they would be able to buy the shares back cheaper after the trading update.

Marks & Spencer is scheduled to report full-year figures next Tuesday but the City is keen to hear how current trading is going. Analysts say that while Next is doing badly, M&S will fare even worse.

It this week announced the appointment of former Treasury mandarin Lord 'Terry' Burns as chairman. But, in a move seen as a compromise deal to heal the deep rifts in the M&S boardroom, he will not take on the top role until next July.