* First few weeks of autumn "disappointing"
* First half profit up 2.7%
* Full year guidance maintained
* Shares fall as much as 5.2%
(Adds detail, CEO comments, updates shares)
By James Davey
LONDON, Sept 19 (Reuters) - Retailer Next has made a
"disappointing" start to autumn trading which it said was down
to unusually warm weather in parts of Britain, rather than
shoppers holding back on buying new clothes due to uncertainty
over Brexit.
Next shares fell as much as 5.2% on Thursday, paring the
stock's gains for the year so far to 48%, after the gloomy
assessment of the first few weeks of the retailer's key
autumn-winter season.
While it did not give figures, Next said "the warm start to
September has done much more to hinder sales than the political
temperature" and it has not seen any evidence that shoppers are
holding back on small ticket price items due to Britain's
planned exit from the European Union next month.
UK retailers, including supermarkets Asda and
Morrisons and home improvement group Kingfisher,
have said uncertainty around Brexit was affecting their
customers.
"At the moment Brexit is the reach-to explanation for
everything in the economy," Next CEO Simon Wolfson told Reuters.
Wolfson pointed out that last week when temperatures in
Scotland and the north of England were significantly cooler than
in the south, the trading performance of the two regions, both
in stores and online, diverged by 10%.
"It would be unlikely that was coincidence - that the areas
that were warm performed 10% worse than the areas that were cool
and that those areas happened to be the ones that were more
worried about Brexit," he told Reuters.
Wolfson, a prominent Conservative "Leave" supporter who sits
in the upper house of Britain's parliament, said consumers were
not buying clothing until they absolutely needed it.
"They're not going to go out and buy their winter knitwear
until it gets cold," he said.
Official UK data published on Thursday showed retail sales
unexpectedly fell on the month in August after shoppers bought
less online than the month before.
Britain is due to leave the European Union on Oct. 31, but
the government has yet to agree a new deal, increasing the risk
of a disorderly "no-deal" Brexit.
Next believes Brexit will only materially affect consumer
spending in the event that it triggers inflationary pressure on
prices or logistical problems at British ports. Next does not
expect its own prices to rise.
PROFITABLE STORES
The retailer also reported a 2.7% rise in first-half profit
as robust online sales more than offset a decline at its stores
and it maintained its forecast for the full 2019-20 year.
Next, which trades from about 500 stores in the UK and
Ireland, about 200 stores in 40 countries overseas and its
Directory online business, made a pretax profit of 319.6 million
pounds in the 26 weeks to end-July.
This was up from 311.1 million pounds in the same period
last year, on group sales up 3.7% to 2.06 billion pounds.
Full-price sales at Next's stores fell 3.9% in the period,
but they were up 11.9% online, starkly illustrating the clothing
industry's structural shift from physical stores to online.
However, the firm says its stores will remain profitable
even if they become less productive.
For 2019-20 Next foresees full-price sales up 3.6% and
pretax profit of 725 million pounds, a 0.3% rise on the 2018-19
outcome, with earnings per share growth of 5.2%, reflecting
share buybacks. Its interim dividend rose 4.5%.
(Reporting by James Davey, Editing by Paul Sandle and Alexander
Smith)
Kingfisher (KGF)
Next (NXT)
