(Sharecast News) - Next reported a frightful Halloween decline in store sales for the third quarter, though a solid online performance saved the retailer from a true horror-show.
Full price store sales lurched 8% lower in the three months to 27 October, worse than 6.9% in the first half of the year and the 6.1% that analysts had scrawled in for the third quarter.
More happily for the FTSE 100 retailer, online sales grew 12.7% versus the 11% forecast, although this was still down on the 16.8% in the first half.
Put together, this meant product sales as a whole grew 1.3% in the quarter, which was short of the 2.1% average City estimate.
If including interest income from customers on the Nextpay scheme, total sales were up 2.0%, which meant total year-to-date sales were dragged down to 3.7% from the 4.5% in the first half. Directors, however, remained confident that Next can reach the full year sales and profit guidance they gave in half-year results last month, of 3.0% total full price sales, roughly flat profit before tax growth and earnings per share growth of 5.0%. Next shares fell almost 5% to 5,056p in early trading on Wednesday.
Analyst Laith Khalaf at Hargreaves Lansdown said: "Another trading statement from a high street retailer, another clear example of clicks hammering bricks.
Like much of the sector, Next is doing the splits as digital and physical sales head in opposite directions.
"The good news for Next shareholders is that when combined, high street and online sales are still heading in the right direction.
As Next rightly points out, clicks and bricks can be complementary, as physical outlets give customers a convenient place to collect and return items." Khalaf conceded that growing revenues is a real positive in such a challenging consumer environment, while the recent Indian summer stretching into October "will have pushed back the need for scarves and mittens". Neil Wilson at Markets.com said the continued reliance on online to make up for store weakness "raises the question about when management seeks to rationalise its store estate in recognition of the shift in where revenues and profits are being generated".
Investors should be aware that past performance is not a reliable indicator of future results and that the price of shares and other investments, may fall as well as rise and the amount realised may be less than the original sum invested.
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