By Sarah Young
LONDON (Reuters) - Next (L:NXT), Britain's most successful clothing retailer over the past decade, warned that its sales could fall as much as 3.5 percent this year, hit by a cool spring and signs of a slowdown in consumer spending.
Next said that it now expected full-price sales for its 2016-17 year to be anything between 3.5 percent lower and 3.5 percent higher, widening the range from a previous forecast for sales to be down 1 percent to up 4 percent.
The downgrade was Next's third in five months and underlined the difficulties facing rivals including Marks & Spencer (L:MKS). Next had warned in March that this year could be its toughest since the financial crisis of 2008.
The fickle British weather was partly to blame for the recent negative trends, Next said, noting that last year March and April were warmer.
"Without having had any good weather it's very difficult to know how much of the underperformance is down to weather and how much is down to the general consumer," Next Chief Executive Simon Wolfson said in an interview on Wednesday.
A recovery in temperatures in the past few days had driven a pick-up in sales.
"We think it's more than likely we're at a low point. The weather has only just turned but what we've seen so far is that as the weather's turned it's quite a significant turnaround," Wolfson said.
British retail sales fell at the sharpest rate in more than four years last month, after cold weather turned shoppers away from new spring and summer clothes, the Confederation of British Industry said last week. It also noted that more money was going on leisure and entertainment.
COULD HAVE BEEN WORSE
Shares in Next rose 4 percent to 5,185 pence at 0930 GMT, which Cantor analyst Freddie George put down to relief.
"These figures are not quite as bad as people feared," he said.
The stock had lost 4 percent over the previous month, and since the beginning of the year, it has plunged 30 percent lagging Britain's bluechip index which was down 1 percent.
Analysts had questioned whether there were company specific issues, such as the maturity of its Directory catalogue and internet business, and intense competition.
Wolfson denied that there were more fundamental problems.
"The big issue we identified in the fourth quarter last year was the stock availability issue which we have corrected," he said.
Next said that as a result of its uncertainty over sales it was also cutting its pretax profit forecast and now expected profit in the range of 748 million pounds to 852 million pounds, compared to a previous range of 784 million pounds to 858 million pounds. Analysts currently expect Next to report annual pretax profit of 829 million pounds according to Thomson Reuters data.