Britain's Next blames warm weather for poor Christmas

Britain's Next reported disappointing sales in the run-up to Christmas, with the normally reliable retailer blaming the unusually warm weather in November and December for a slowdown that could hit the wider sector.

The firm said Next brand full price sales in the 60 days from Oct. 26 to Dec. 24 were up 0.4 percent, compared with company guidance for second half growth of 3.5-7.5 percent and third quarter growth of 6.0 percent.

Next, which trades from more than 500 shops in Britain and Ireland, about 200 mainly franchised stores overseas and its Directory catalogue and internet business, is the first major British retailer to report on festive sales.

Its poor performance augurs badly for rivals as it has been the strongest player in the sector for a decade. Peer Marks & Spencer is due to report on Thursday.

Next produced a graphic showing the link between the warm weather and the weaker sales, but it also cited poor stock availability and increased online competition for the weak performance.

Next said that thanks to good control of margins, costs and stock, along with healthy clearance rates in its post-Christmas sale it expected to make a 2015-16 pretax profit of 817 million pounds ($1.20 billion), towards the lower end of guidance of 810-845 million pounds issued in October.

Shares in the firm are up 9.9 percent year-on-year but have fallen 9.4 percent over the last month on Christmas trading concerns. They closed Monday at 7,190 pence, valuing the business at 11.0 billion pounds.

Next is currently budgeting for full price sales growth in the 2016-2017 year of 1 percent to 6 percent, with profit growing in line with sales.

The firm, which has a well-established policy of returning surplus cash to shareholders through share buybacks or special dividends, also said on Tuesday it would pay another special dividend of 60 pence.