 Next said it had too much stock ahead of the sales |
Next has said its annual profit will be �5m less than previously expected as its end-of-year clearance sale has proved disappointing. "Clearance rates in our end-of-season sale have been below our expectations," the company said.
The High Street retailer said it now expected to report annual profits of between �415m and �425m ($779m-798m).
Next's shares fell more than 3% following the release of the trading statement.
Over-stocked
Next chief executive Simon Wolfson admitted that festive sales were "below where we would expect a normal Christmas to be", but said sales should still top analyst expectations.
 |  In terms of all the worries about their trading pre-Christmas, it's a result  |
Among areas where Next could have done better, Mr Wolfson said menswear ranges were "a little bit too similar to the previous year".
Mr Wolfson also said that disappointing pre-Christmas sales were "more to do with the fact that we went in with too much stock rather than (the fact that) demand wasn't there for the stock".
Price cuts
Meanwhile, the CBI said High Street retailers appeared to have cut prices in order to attract shoppers into their stores in the run-up to Christmas.
Its Distributive Trades Survey for December showed that 53% of firms reported that sales volumes were up on 2003, while 20% said they were down. The positive difference of 33% compared to that of +19% in November.
Yet despite the pick up, the CBI survey showed that December sales were only rated as average for the time of year, with 19% of firms saying they were good and 20% describing them as poor.
"If as is likely, widespread discounting drove December's increase in sales volumes, then value and profitability will have remained subdued," said the CBI's chief economic adviser Ian McCafferty.
'Within the comfort zone'
Next's like-for-like store sales in the five months from 3 August to 24 December were up 2.9% on a year earlier.
This figure is for existing Next stores, which were unaffected by new Next store openings.
Like-for-like sales growth at the 49 Next stores directly affected by new store openings in their locality was 0.5%.
Overall sales across both its retail and mail order divisions were up 12.4%, Next said.
Its Next Directory mail order division saw sales rise 13.4% during the five-month period.
"In terms of all the worries about their trading pre-Christmas, it's a result," said Nick Bubb, an analyst at Evolution Securities.
"Profits of around �420m would be well within the comfort zone."
However, one dealer, who asked not to be named, told Reuters that Next's seasonal sales performance was "not what people had hoped for".
"Christmas has been tough for the whole sector, and this is one of the best retailers," he said.
Next's trading statement comes a day after House of Fraser and Woolworths disappointed investors with their figures.
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