Retailer blames weather for poor sales? Whatever Next?

Outlook

The unseasonably warm weather was being bemoaned not by Marc Bolland of M&S, but by Next (Getty)

Unexpected weather battering a retailer’s numbers. It must be time for Marks & Spencer’s results, right? But wait, what’s this? Surely it can’t be? But it is. The unseasonably warm weather was being bemoaned not by Marc Bolland of M&S, but by Next. The high street star was one of the first into bat with its post-Christmas sales figures, and it limped out to the wicket before playing a shaky forward defensive.

The Next chief executive, Lord Wolfson, and his team are rare beasts in the business world, in that they tend to favour plain speaking over the sort of gobbledygook their rivals regularly indulge in. This is what they said: “Whilst warm weather may have been the main reason for a difficult fourth quarter, we would not want to allow difficult trading conditions to mask any mistakes and challenges faced by the business.”

Oh dear. If you don’t want to be seen to be masking your mistakes, why mention the weather at all? The fact is, Next wasn’t terribly smart with the way it handled stock for its online and catalogue businesses, and its rivals are getting better at using the internet to sell their wares. It’s also tough on the high street and the weather didn’t help. But then, in this country, it rarely does; blaming the weather is cheap.

Next’s shares duly lost 5 per cent, but it could have been worse. They have a very fancy rating (19 times forecast earnings) for a retailer and the price has been appreciating for five years. Given how unaccustomed investors are to Next surprising on the downside, they might have fallen further. They arguably should have, particularly if this confirms that the company has hit a plateau or, worse still, has belatedly succumbed to the general malaise on the high street.

Next was probably propped up by the fact that investors know that if its shares hit too low a level, it will use its cash to go into the market and buy them back. And at least the company’s mulish refusal to indulge in promotions should keep profits from undershooting exceptions (although they’ll come in at the bottom of the range).

Lord Wolfson has enough goodwill in the bank to be forgiven a bad outing or two. But he needs to fix the issues he talked about. There might not be any adverse weather to blame next time.