Next’s fourth quarter numbers marked a period of falling sales and shrinking profits for the former high street wonder kid.

But should the blame for its poor performance be laid at boss Lord Wolfson’s door, or is it down to wider market factors?

And will Next’s lacklustre festive season look better or worse come Super Thursday next week, when big names including Marks & Spencer update?

In the 13 weeks to Christmas Eve, Next’s full-price sales fell 0.4%. Retail sales fell 3.5% while Directory sales rose 5.1%.

More disappointing was that Next itself had thought things would turn out better: while it escaped a repeat of a dreadful third quarter in which full-price sales fell 3.5%, this was the golden quarter, and it was set against a weak comparable period in the previous year.

“We expect the cyclical slowdown in spending on clothing and footwear to continue into next year”

Despite the numbers, Next looks set to make its full-year profit guidance by the skin of its teeth.

Earnings should come in at £792m for the full year, give or take £7m either side.

Its guidance ranged between £785m and £825m.

That £792m would represent a 3.6% fall on last year’s pre-tax profit.

It’s not a desirable situation, but it’s nowhere near as dire as Lord Wolfson believes 2017 may turn out be.

The retailer said in its statement this morning: “The fact that sales continued to decline in quarter four, beyond the anniversary of the start of the slowdown in November 2015, means that we expect the cyclical slowdown in spending on clothing and footwear to continue into next year.”

That reasoning has resulted in the ever-cautious Next warning that sales, in constant currency, would be between 4.5% down and 1.5% up for 2017/18, and that pre-tax profits would come in at between £680m and £780m.

The lower end of that guidance is 14% below the estimate for this year of £792m.

And this morning’s numbers haven’t just hit Next hard: share prices at competitors M&S and Debenhams have suffered too.

A disappearing competitive edge?

So, are Next’s problems representative of the wider market or do they originate closer to home?

Experts are divided on that point.

There is no doubt that Next has lost at least some of its competitive edge.

Where once its fulfilment capabilities were the envy of competitors, now they look pretty standard.

“The competition may have made life a little too easy for Next”

Jonathan Pritchard, Peel Hunt

Design, always middle-of-the-road, is now even more so and buying times are still lengthy, despite Next’s efforts to reduce them, according to Retail Week Prospect analyst Rebecca Marks.

But it is difficult to fault Next on much more. There are no huge structural problems to be tackled: cash flow is healthy and costs are well managed.

Its problems may instead stem from rivals beginning to make a recovery.

“The competition may have made life a little too easy for Next,” says Peel Hunt analyst Jonathan Pritchard. “Retailers like Debenhams and M&S are now beginning to get their act together, although they still have their problems.”

He believes that Next will not “prove to be representative of the clothing Christmas performance” and that “in two weeks’ time, Next’s performance will look relatively worse when we have heard from the competition”.

Certainly Jigsaw turned out an excellent Christmas performance, revealing a sales increase of 10% yesterday – admittedly only over a five-week period to December 31.

However, it is a very different retailer to Next, with a very different proposition.

But despite the differences, its numbers show that there was some consumer appetite for buying clothing this Christmas.

The wider market

However, fears about the year to come – such as inflation eroding real earnings – could already be influencing shopping behaviour.

That is against the backdrop of shifts in consumer spending, shakey consumer confidence and possible price rises.

Such factors, says industry expert Richard Hyman of Richard Talks Retail, mean the market is to blame for Next’s performance

“The figures are not worse than I expected,” he says. “Next isn’t immune from this market – very few are.

“It has for some years, and continues to be, the strongest of the mid-market fashion retailers. These figures do not change that, as next week will show.”

Haitong’s Tony Shiret takes an even-handed view.

“It has for some years, and continues to be, the strongest of the mid-market fashion retailers”

Richard Hyman, Richard Talks Retail

“December’s poor performance could be a market-wide thing,” he says. “But that won’t gloss over the problems at Next.

“Its Directory credit customers are not bringing in as much revenue.

“Directory grew, yes, but half of that rise will be from international customers.

“If its customer base was simply shifting from shops to online, then you would expect more of a shift.”

“It is justifiable to blame some external elements,” acknowledges Pritchard. “But Next need to look at themselves too.”

The truth is that Next’s problems are both internal and external, caused by competitors upping their game and a difficult market.

The extent to which each is responsible should become clear next Thursday.