Next Admits Summer Heatwave Stock Blunder
Next has admitted that a stock blunder left it short of summer fashions during the UK's heatwave.
The retailer said it did not have enough warm weather "transitional stock" to sell after its July sale and for the launch of its autumn range as temperatures reached their highest levels since 2006.
While it did not put a price on the potential impact, Next confirmed its pre-tax profits for the six months to July reached £271.8m - a rise of 8.2% on the same period last year - as its Next Directory business continued to drive growth.
It was among a bunch of big retail names to report their progress on Thursday though the result periods did not cover August when official statistics suggested a feel-good factor emerged among consumers thanks to the summer sun.
John Lewis said its half-year profits to July 27 fell 38.5% to £68.5m, largely as a result of a £47.3m charge to rectify mistakes with its holiday pay policies.
But the employee-owned partnership, which has 39 John Lewis shops and 294 Waitrose supermarkets, racked up £4.7bn in sales - an increase of 7% despite comparisons with strong trading last summer.
Morrisons, on the other hand, saw its pre-tax profits dive 22% to £344m.
The supermarket chain said its sales fell 1.6% in the six months to the start of August, saying its customers had yet to benefit from the gradually improving economy.
It said customers' incomes were shrinking under relentless pressure from stubbornly high inflation and were increasingly shopping about for bargains, with more than 40% visiting multiple supermarkets on one shopping trip.
However, its share price rose 4% on opening as investors were encouraged that the slide in Morrisons' sales was easing.
Morrisons, which has been slow to capture convenience market share, also said it remained on track to start selling food online - through a tie-up with internet grocer Ocado - by the end of January.
Ocado itself reported a 16.4% rise in sales in the 12 weeks to August 11, highlighting the current lack of online penetration at Morrisons.
One company that did reflect August trading was Home Retail Group - the owner of Homebase and Argos.
It said that sales of big ticket items such as garden furniture and BBQs rose strongly as the heatwave took hold.
The retail results were seen as demonstrating the continuing bitter battle for business - especially in the supermarket sector - as wage growth continues to lag behind inflation.
None of the chains reporting on Wednesday pointed to a change in their fortunes as a result of a dramatic improvement in the consumer outlook.
But Next declared that the squeeze in consumer credit appeared to be over.
It pointed to the pick up in mortgage lending as a reason to be "encouraged" following five years that saw customers dramatically reduce their unsecured borrowings.