MarketLine Blog

Next alone in its Christmas disappointment

The Christmas trading period is the most important time of the year for retailers, accounting for a significant proportion of a company’s sales and profit. In January 2017, numerous UK retailers revealed their Christmas 2016 trading results, with many high street retailers hailing the festive period a success. A notable exception to this was Next PLC, which revealed it had faced a difficult Christmas trading period and warned of a problematic retail environment in the UK as a whole.

On 4th January 2017, Next was the first high street retailer to report its Christmas trading results. Full-price sales within Next stores were revealed to be down by 3.5%in the eight weeks leading up to Christmas, and down by 4.3% in the year to Christmas. Chief Executive, Simon Wolfson, painted a gloomy picture for UK retail on the whole, leading to the share price of not only Next, but other UK retailers tumbling.

In the week following the announcement of Next’s dismal Christmas trading results, a slew of positive announcements from numerous retailers were revealed.  Companies such as Marks & Spencer (M&S), Debenhams, John Lewis, Tesco, Morrisons, and Sainsbury’s all revealed encouraging results for their festive sales. Following the reporting of these trading results, many high street retailers saw their share price begin to rise again.

Retailers in the UK have faced a tough environment in recent months and years. Recession, changing consumer attitudes and preferences, and the economic upheaval caused by Brexit have all taken their toll. As such, the general feeling amongst the high street retailers was that of caution and pessimism as companies prepared to ride out the most recent storm. However, the Christmas trading results released in the second week of January 2017 revealed that many retailers had fared much better than expected.

It appears that many of the UK high street retailers are riding out the storm more successfully than Next. While Wolfson’s comments on the bleak outlook facing UK retailers in 2017 may be true; Next needs to face up to the problems in its own business, namely an ageing customer base and increased competition from other retailers, and tackle them head on.

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