Bellwether fashion retailer Next will report on its autumn quarter sales this week with analysts predicting a marked drop in retail sales and a flat performance at Directory.
If the news proves correct the results will spook the high street as Next has, for years, been a solid performer and a true indicator of consumer sentiment.
According to the Sunday Times, Santander suggests overall sales will be down 4.5% while store sales will drop 7.6% and Directory will remain flat.
Rebecca McClellan of Santander told the newspaper that the quarter under review contained “almost an entire month of unseasonably warm weather” and the retailer faced tough comparisons year on year.
When Next last updated the market with its six-month figures to the end of June this year it reported a drop of 0.3% in full price sales, indicating consumers’ increasing reluctance to buy without the incentive of a discount, with overall sales up 3% at £1.9bn.
The unseasonably warm autumn has mean many retailers are discounting AW16 stock already with more discounts expected to come during the Black Friday and Cyber Monday sales period at the end of November, which has come to mark the beginning of the festive shopping period.
Next CEO Lord Simon Wolfson has warned that increasing manufacturing costs, as a result of the slump in sterling following the Brexit vote in June, will mean that prices for consumers could rise by up to 5% next Spring.