Next and B&Q owner Kingfisher to post results

High street chain Next is expected to post lower-than-expected annual profits on Thursday, leaving investors to wonder whether 2016 will be another tough year on the high street for clothing retailers.

The firm downgraded its central full-year profit forecast to a rise of four per cent to £817 million in January, from £827 million, after it blamed unusually warm weather for a “disappointing” festive sales performance.

The well-regarded retailer posted a shock 0.5 per cent fall in sales across its 540 stores in the 60 days to December 24, while growth across its Next Directory online and catalogue arm slowed sharply to two per cent as its trading woes were compounded by stock shortages and tough online competition.

However, Next said its move not to discount ahead of Christmas meant its full-year profit range was maintained at between £810m to £845 million.

Next CEO Lord Wolfsonsaid sales of coats and knitwear were hit particularly hard in the run-up to the festive season.

The City will want an update on how B&Q and Screwfix owner Kingfisher plans to battle the new competition that has swept into the DIY sector when it posts its full-year results on Wednesday.

Rival Homebase was bought by Australian group Wesfarmers for £340 million in January from Argos owner Home Retail Group, in a deal that brings a new player with deep pockets into the UK market.

Supermarkets-to-industrials firm Wesfarmers has a market valuation of almost £22bn, and is the largest private sector employer in Australia with around 210,000 staff.

Wesfarmers MD Richard Goyder called the £38bn UK home improvement and garden sector an “attractive market”.

However, the City expects to see Kingfisher’s annual pre-tax profit fall by four per cent to £688m as the group presses on with its revamp and 60 store closures that will affect up to 3,000 jobs.