The week ahead
May 2 2008 By Andrew Mernin
A trading update from Next and half-year results from easyJet should give an indication of consumer confidence next week.
Fashion chain Next’s first-quarter trading update on Thursday is set to make grim reading amid the toughest retail conditions in years.
At annual results in March, the group predicted like-for-like sales declines of between 4% and 7% across its high street stores in the first half of the year.
Next fears its main customers - aged between 25 and 45 - are likely to be hit heaviest by higher costs and debt burdens as the credit squeeze makes itself felt on the high street.
The poor weather seen so far in March and April also makes for a tough comparison with last year’s early heatwave which drew out the shoppers.
JP Morgan analyst Richard Chamberlain said the retailer was up against a ``perfect storm", predicting first half sales at the bottom end of the guided range.
He said: ``Last year Next benefited from unseasonably warm weather in March and over Easter, whereas this year the weather has been colder and Easter much earlier.
``The colder weather may have boosted some of Next’s home ranges, but will have impacted sales of Spring/Summer clothing."
But Next was struggling with high street sales declines before the credit crunch hit home and spent last year revitalising its stores and ranges and moving up-market in an attempt to ``put the magic back" into the brand.
Despite the company’s sound financial position, Mr Chamberlain added: ``We believe that the company needs to convince the market that it has the potential to generate same store sales growth in a more benign consumer environment."
Next’s online and catalogue Directory has been a key sales driver in recent years as the high street stores struggle. The company predicts sales growth of between 0% and 2% in the first half for the division.
The potential impact of soaring fuel costs will dominate budget airline easyJet’s interim results on Wednesday.
In nebusiness next week:
We meet the former skydiving champion at the helm of one of the region's most successful family businesses.
Chris Knox takes an in-depth loko at the region's growing music industry.
On Thursday online and in The Journal, we bring you our new weekly four-page technology supplement, nedigitalbusiness.
