Next sales slump as gloom hits retailers

FURTHER signs of the decline of consumer spending on the high street were seen today as retailer Next announced another slump in sales.

The clothing firm said overall retail sales were down five per cent to £518.1 million in the 13 weeks to April 26. When new store openings are stripped out there was an 8.9 per cent decline at the 340 stores were open this time last year.

It is the latest in a string of retailers to post gloomy figures as the credit crunch continues to curb consumer spending.

But Next said sales had "picked up markedly" in the last 11 days, helped by the unexpectedly warm weather. In a statement today the firm said: "Financial pressures on our customers resulting from cost increases in food, fuel, mortgage repayments and taxation look set to continue. However, we continue to believe sales in the second quarter will improve significantly."

At its annual results in March, the group predicted a like-for-like sales decline of between four per cent and seven per cent across its high street stores in the first half of the year.

It said today the figure was likely to be towards the bottom end of that forecast, at around minus seven per cent.

"We had planned for weak demand and remain confident we will have less stock for the end of season sale than we had at the same time last year," the retailer said. "As a result, we are not planning any additional markdown activity."

The update from Next comes as the Scottish Retail Consortium (SRC) said retailers in Scotland were not passing on the full costs of price rises to customers.

In its shop price index for April, it said year-on-year prices had increased by two per cent in Scotland, nearly double the 1.2 per cent rise in the UK.

Fiona Moriarty, director of the SRC, said: "Although in April Scottish shop prices rose faster year-on-year than the previous month, the price of non-food goods continues to fall and the shop price of food is going up more slowly than increases in world commodity prices.

"Scottish retailers are protecting their customers from the full force of cost increases."