Fashion retailer Next has warned that it will have to lower its profits guidance for this year if the Indian summer continues throughout October.
September is an important month for the industry but, with slower demand for jumpers and coats, Next’s sales are currently up six per cent in the quarter to the end of October, rather than the 10 per cent previously forecast for the period.
It hopes that it will recover some of the lost sales when the weather turns, but if the unusually warm conditions continue for the whole of October, it is likely to lower its full-year profit guidance of £775m to £815m.
The group, which overtook Marks & Spencer with a £695m annual profits haul earlier this year, had been experiencing its strongest sales growth for many years before its performance began to slow down in September.
Next shares opened five per cent lower, while other retailers were also affected by the update.
Next said the tougher trading in September followed a period of cooler weather in August, which resulted in several very strong weeks for sales.
The company will provide a further update on the third quarter on October 29.
Freddie George, a retail analyst at Cantor Fitzgerald, has retained his buy rating on the stock and said the underlying trends for Next remain positive, in contrast with the difficult conditions facing M&S and Debenhams.
He added: “The impact of the mild weather, which we have been flagging up over the last two weeks, is impacting all retailers in the UK and is only a temporary phenomenon.”
Next has a high profile store at the £350m Trinity Leeds shopping centre.
Apart from its retail operations, Next also has a distribution centre in South Elmsall, West Yorkshire.