Fashion chain Next will be first out of the blocks from the retail sector with its festive trading update on Wednesday in what will give an insight into how clothing firms fared over Christmas.
It will also shed light on whether Next was able to stage a much-needed recovery in its final quarter after a dire performance earlier in 2016.
Described by one analyst as its “annus horribilis”, 2016 was tough for Next as a shift in consumer spending saw sales tumble, with the firm delivering a series of profit warnings.
Third-quarter trading was particularly woeful, with high street sales falls worsening to 5.9 per cent.
Boss Lord Wolfson had already warned that the last year would be the “toughest we have faced since 2008’’ following unhelpful weather and changes in consumer spending away from fashion towards eating out and travel. He also cautioned that Next may have to hike its prices by up to 5 per cent in 2017 as it faces surging costs from the Brexit-hit pound. But he signalled potential for a turnaround over the all-important Christmas season after mild weather hit sales at the end of 2015/16.
Matthew Taylor, retail analyst at Numis Securities, is pencilling in a 0.5 per cent rise in Next’s fourth-quarter high street branded sales. He said: “We expect a positive fourth-quarter update, given the more seasonal weather and weaker comparisons, reflecting warm weather and poor Directory availability last time.”
Recent sales figures show retail sales have held up well overall since the Brexit vote, but clothes sales still lag the wider sector. After a welcome boost in October, when there was a surge in demand for winter clothing, fashion sales then fell back by 1.4 per cent in November, according to official figures.