Updates from two major UK fashion retailers has one blaming a sharp downturn in sales on the “beast from the east” cold snap and another saying the recent hot weather had generated a jump in sales and profits.
Next said the balmy spell, which included the warmest April day in the UK in almost 70 years, resulted in a £40m sales boost as Britons splashed out on summer dresses, T-shirts and shorts. Its shares were the biggest riser in the FTSE 100 on Thursday, up about 6%, after the retailer beat City expectations with a 6% increase in sales for the three months to 7 May.
Shares in Superdry, however, plunged 18% after its chief executive, Euan Sutherland, blamed “snow disruption” and the cool start to spring for putting a dampener on sales of its new clothing ranges.
The fashion brand also revealed that price cutting had taken a bite out of profit margins in the year to 28 April as it trimmed it sales forecast for 2019. “The consumer environment remains challenging,” said Sutherland, adding that sales through its shops “remained under pressure”. He highlighted “lower year-on-year average temperatures at the start of the spring-summer season” as a major factor.
Next has been one of Britain’s most successful clothing retailers in terms of profits but it has faltered over the last two years as consumer spending has shifted away from clothing towards holidays and entertainment.
Sales were 10% lower than in 2017 during a snowy week at the end of February, but they rose more than 25% in one mid-April week when Britain basked in fine weather. Next’s chief executive, Simon Wolfson, said the sunshine boost would add £12m to annual profits, which were now expected to be about £717m.
However, the better-than-expected performance was down to its website, where sales surged 18.1%. The trend of falling sales at its high street stores continued with a 4.8% drop.
At Superdry, Sutherland also revealed its fledgling US business was now expected to make a £3m loss, rather than a small profit, after poor trading in stores was compounded by extra investment after it took over the running of the wholesale division. Overall the retailer is expected to report a 11.5% increase in full-year profits to £96.5m.
Eleanor Parr, an analyst at GlobalData, said: “[Superdry] anticipates that generating store sales will continue to be difficult this financial year, which makes the success of [its] online and wholesale business more critical.”
