Next says April washout won't hit profit
LONDON (Reuters) - Next (NXT.L), the country's second-biggest clothing retailer, said a strong March, when the weather was fine, offset a weak April, when the cold and rain kept shoppers at home, enabling the firm to hold its profit outlook for the year.
"Pretty much sales went up and down with the temperature gauge," chief executive Simon Wolfson told Reuters on Wednesday.
"March was good, we had some weeks that were double digit up and April was the reverse," he said.
Although April this year was the wettest Britain has experienced since records began Wolfson does not expect too much damage.
"When you get a prolonged period of unusual weather it does affect sales but on the whole these things tend to even out over the year," he said.
DEFYING THE GLOOM
Many retailers are struggling as consumers grapple with higher prices, muted wage growth and government austerity measures, as well as worries about job security, a stagnant housing market and fallout from the euro zone debt crisis.
Next has generally defied the gloom, helped by its strong online offer and new store openings.
Wolfson, a prominent euroskeptic and supporter of Britain's ruling Conservative Party who sits in the upper house of Parliament, said he did not expect news that the country had dipped back into a technical recession to prompt a fresh slump in consumer confidence.
"Who's going to say 'we're in technical recession so I'm not going to go out and buy a new pair of trousers'?," he said.
Shares in Next rose 2 percent after the firm said total sales increased 1.4 percent in the 13 weeks to April 28, its fiscal first quarter. That compared with forecasts in a range for 0-2 percent in a Reuters poll.
Retail sales fell 3.9 percent, versus forecasts in a range of flat to down 5 percent, while sales at its Directory online and catalogue business were up 11.8 percent versus forecasts of a 10-15 percent rise.
Next was up against tough comparative numbers as last year's first quarter sales rose 5.2 percent, boosted by an exceptionally warm Easter and a Royal Wedding. Second-quarter comparatives are less demanding.
The firm maintained its forecast issued in March and said first-half profit should be ahead of last year.
It is budgeting for total sales to be up 1-4 percent in its first half, with retail sales in a range of flat to down 3 percent, and Directory sales up 9-12 percent.
It is also budgeting for 2011/12 sales growth of 1-4 percent, pretax profit of 560-610 million pounds ($908-$989 million), and earnings per share growth 5 percent ahead of the growth in profit.
Prior to Wednesday's update Next shares had risen by nearly a third in value over the past year, though they did fall last month after Wolfson sold 3.8 million pounds of stock.
"I sold pretty much straight after our (annual) results, so when the market had the maximum amount of information, I only sold 7 percent of my holding, and I'm just about to get married so I'm looking to move house," he said.
The shares were up 53 pence at 2,948 pence at 08.59 a.m., valuing the business at 5.01 billion pounds.
"The shares are trading only in line with the UK clothing and homewares peers, which seems incongruous with the quality of the company's management and consequently the earnings stream," said Panmure Gordon analyst Jean Roche.
(Reporting by James Davey; Editing by Dan Lalor and Helen Massy-Beresford)
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