Alarm bells are sounding over the fashion sector after a warm September prompted Next to warn third quarter sales had been hit.
City analysts have expressed concern over Marks & Spencer and Debenhams because of the warmer weather that has dampened sales of high-ticket products such as winter coats and boots.
Cantor Fitzgerald analyst Freddie George remained less worried about Next because of positive underlying trends at the business, but said: “We would be more concerned for Marks & Spencer and Debenhams.”
Independent analyst Nick Bubb said: “Next are probably being unnecessarily cautious, ahead of investor meetings this week, but the market is unlikely to take any chances and the shares will be unnerved first thing along with high street fashion rivals like M&S and Debenhams.”
Investec analyst Alistair Davies said: “Sentiment is likely to be hit across the clothing sector this morning, with initial strong sales growth seen in August slowing through September, as reflected in recent John Lewis sales data.”
Next warned this morning that unseasonably warm weather in September has hit its third-quarter sales and the retailer said if it continues it will impact full-year profits.
The fashion retailer said sales in the quarter were up 6%, lower than the forecast 10% growth in the period. That is despite it changing its buying habits to ensure its ranges are more “weather-appropriate in the transitional spring (January and February) and autumn (August and September)” periods. It said in July it had moved from a two-season cycle to four distinct seasons: spring, summer, autumn and winter.
Despite fears over the clothing sector, it is thought both M&S and Debenhams are sticking to their scheduled updates, on November 5 and October 23 respectively.
John Lewis has also blamed warm weather for its slump in clothing sales over recent weeks. Fashion sales fell by 13.1% in the week to September 13, and by 6.9% in the week to September 20.
A source close to Debenhams maintained that the department store group’s wide range of products means it does not rely on just fashion to drive sales and added that its trading over the next three months will be more critical to the retailer’s first-half performance.
Brian McCluskey, chief executive of shoes retailer Office, told Retail Week: “The warm weather is definitely hurting heavier winter products such as boots - without a doubt sales of all winterwear such as ankle boots are down a bit on last year.”
However, McCluskey added that sales of trainers are “flying”. “Sports and casual shoes do well in this weather,” he said. “We’re at an advantage because 51% of our business comes from sports.”
Jigsaw chief executive Peter Ruis said: “It’s not been great but September is often a warm month. The mornings started to get colder last week and that had an instant impact [on customers buying warm clothing].” However Ruis said the milder weather wouldn’t lead to him rushing to discount coats. “If you’re not selling because it’s too warm, then taking 20% off is not going to help you,” he added.
One chief executive of a womenswear retailer said: “Although things have been tough in September, because we got hit in August when it was wet and cold, we actually had more summer stock than other brands. So we’ve purposely had more summer stock in to sell.”
A spokeswoman for the Met Office said early indications were that the weather in October would return to average maximum temperatures of around 12.79c for the UK. “Although it’s at risk of change, indications at the moment suggest the weather will be unsettled for the most of October with spells of wet and windy weather,” she said. “The temperature could dip below average levels in some areas in the north.”