High street clothing and homewares retailer Next Plc (LON:NXT) has reduced the upper end of its full-year profit and sales guidance after reporting a drop in first-quarter sales at the bottom-end of its range of expectations.
In a trading update for the thirteen weeks to Saturday 29 April, Next said its full price sales were down -3.0%, while total sales, including markdown sales, were down -2.5%.
READ: Next investors shrug off annual profit decline and note robust cash flows
WATCH: Wilson King's Richard Hunter on Next's 'fairly disappointing' update
CLICK HERE: For a daily round-up of all the Proactive news
At the time of its full year results in March, Next said that it expected full price sales in the first quarter to be towards the lower end of its then full year guidance range of +2.5% to -3.5%.
The firm has now reduced that upper end guidance to +0.5% while maintaining its lower-end forecast at -3.5%.
Next also reduced the upper end of its group full-year pre-tax profit forecast to £740mln, down from £780mln previously, with the lower end maintained at £680mln.
In early trading, Next shares topped the FTSE 100 fallers list, dropping almost 6%, or 255p to 4,155p.
Independent retail analyst, Nick Bubb, said: “After the modest rally in the Next share price yesterday, we had hopes that today’s eagerly-awaited Q1 update might strike a more optimistic note, given the benefit from warm spring weather, but, alas, no such reassurance has been forthcoming.”
Next retail sales drop; Next Directory sales up
In its latest trading statement, the group said Next Retail sales dropped by 8.1% in the first quarter, while Next Directory sales rose by 3.3%.
It noted that the combined sales performance of March and April was better than February, which it believes was assisted by the later, warmer Easter.
But, Next said: “The UK consumer environment remains challenging, particularly in the clothing and homeware markets, and real wage growth is now close to zero.”
In an effort to sweeten the fresh profit warning once again, the group confirmed its intention to pay a second special dividend of 45p a share on August 1, matching the first special dividend it paid on May 2, reflecting the fact its cash flow remains strong.
Next, which revealed in March that it plans to pay four special dividends of 45p each this year, said it expects to generate £255mln of surplus cash in the current year after deducting interest, tax, capital expenditure and ordinary dividends.
-- Adds share price, analyst comment, analyst video --