Top story

Next (NXT) has posted better than expected trading in the run-up to Christmas, but a 6.1% drop in in-store sales points to a festive trading difficulties in non-food for traditional retailers.

Overall Next’s full price sales for the 54 days from 1 November to 24 December were up 1.5% on last year, an improvement over guidance of a 0.3% sales fall.

Retail sales were down 6.1, despite a 1.5% boost from new space, while online sales jumped 13.6% in the period.

Next said stock for its end-of-season sale (including the stock put into our Black Friday event) was well controlled and down 6% on last year, while clearance rates are in line with expectations.

Next said better than expected full price sales means that it is able to marginally upgrade its profit guidance.

Central guidance for group profit has increased by £8m to £725m and profit guidance range is now £718m to £732m (up from central guidance of £717m), though where it falls within this range depends on sales in January.

However, Next warned that many of the challenges it faced last year look set to continue into the year ahead.

It stated: “Subdued consumer demand driven by a decline in real income, the increase in experiential spending at the expense of clothing, and inflation in our cost prices remain challenges for 2018.

“However, we believe that some of these headwinds will ease as we move through the year; we already know that cost price inflation will reduce to 2% in the first half and believe it will disappear in the second half.”

Christmas updates from the supermarkets look set to wait until next week, with the first scheduled update from Morrisons on 9 January.

Morning update

Troubled South African retail group Steinhoff has announced it will restate its 2016 accounts and restate its 2015 comparative figures as it looks to uncover the depth of the accounting issues behind its recent collapse in share price.

It said the internal review of accounting irregularities by the management team and the PwC will result in a restatement of its 2016 accounts and restatement of the comparative 2015 statement of financial position of Steinhoff “that will provide additional insight into the cumulative and consolidated opening balances in the 2016 restated consolidated statement of financial position.

It said due to the restatements, the 2016 and 2015 financial statements of Steinhoff International Holdings Proprietary Ltd “can no longer be relied upon”, while the irregularities also affect the stated accounts of Steinhoff Investment Holdings Ltd.

On the markets this morning, the FTSE 100 has opened down 0.1% at 7,643.5pts.

Risers so far include retailers boosted by better than expected Next performance. Marks & Spencer (MKS) is up 2.7% to 324.5p, Primark owner Associated British Foods (ABF), up 2.6% to 2,850p and Sainsbury’s (SBRY), is up 1.4% to 244.7p. Next itself has jumped 9.4% to 4,923p.

Early fallers include Total Produce (TOT), down 2% to 220p, Premier Foods (PFD), down 1.6% to 41.9p, Imperial Brands (IMB), down 1.2% to 3,117.5p and Greene King (GNK), down 1.2% to 561.7p.

Yesterday in the City

The FTSE 100 started 2018 dropping 0.5% back to 7,648.1pts, albeit falling from record highs reached in the final days of 2017.

Major stocks slipped as the pound strengthened against the dollar to its highest level for more than a year, rising over 0.5%pts to US$1.3594 while climbing almost 0.4% against the euro to €1.128.

Global fmcg companies were weakened by the currency effect on international sales, with Greencore (GNC) down 2.5% to 224p, Unilever (ULVR) down 2% to 4,045p, Diageo (DGE), down 1.7% to 2,678p, Reckitt Benckiser (RB) down 1.7% to 6,800p, Coca-Cola HBC (CCH), down 1.7% to 2,379p and British American Tobacco (BATS), down 1.6% to 4,940p.

Other notable fallers included B&M European Value Retail (BME), down 1.8% 416.1p, WH Smith (SMWH), down 1.8% to 2,306p, Tate & Lyle (TATE), down 1.7% to 691p and Cranswick (CWK), down 1.5% to 3,286p.

Patisserie Holdings (XXX) was up 7.2% to 378.5p in the expectation it will bid for Bread Holdings in the coming days.

Other risers included Green King (GNK), up 2.4% to 568.4p, Nichols Beverages (NICL), up 1.2% to 1,560p, C&C Group (CCR), up 0.9% to €2.86 and PayPoint (PAY), up 0.9% to 921p.

Topics