The market has been fearful that consumer-facing companies would experience a sharp decline in trading, and indeed we’ve seen several businesses already report this trend.
In Next’s case, sales have weakened versus a year ago, but if you compare the figures to pre-pandemic they are still considerably ahead.
Next said there has been a dip in online shopping as customers returned to stores. Total full price sales in the 13 weeks to the end of April increased by 21.3 per cent on the same period a year ago, although online sales dipped by 11 per cent.
The fall in online sales compared to 12 months ago was blamed lockdown measures when stores were shut to customers last year. Store sales jumped 285 per cent on the same period a year ago as a result.
Once the latest energy bills hit the doormat, households are going to have a shock when they try and work out how much money is left after paying for food, drink, utilities, council tax and other monthly outgoings. There remains a big risk that non-essential retailers will be left out in the cold because households’ money no longer goes as far.
“Unless you need smart clothes for a job interview or need to replenish socks and underwear, there is a strong argument to make existing threads last longer when money is tight. Next may have one of the best management teams in the retail sector, but there is only so much they can do in the current situation,” said AJ Bell’s Russ Mould.