–Adds Detail To Version Transmitted At 0729 GMT
–Next Says May Have To Hike Prices By Around 8%

LONDON (MNI) – The first large UK clothing retail company to
publish its new year trading statement has said that its sales were
“significantly affected” by extreme weather, with instore sales falling
6.1% in the last five months of the year on a year ago.

The retailer’s mail order catalogue tempered the effects of the
fall in instore sales with the company seeing sales rise 0.2% on a
like-for-like year-on-year basis for the trading period August 1 through
December 24, according to a trading statement released Wednesday.

Music and DVD retailer HMV also released a trading statement
Wednesday and said its sales in the UK and Ireland fell 13.6% on
like-for-like basis in the five weeks through January 1.

Both Next and HMV said poor weather and a softening in consumer
spending contributed to poor sales during this period.

In its trading statement HMV said:

“The challenging entertainment markets, combined with the severe
weather over our peak trading period have had a negative impact on our
trading year to date. In addition, there are well-reported consumer
headwinds as we enter 2011.”

In its statement Next said that the outlook for 2011 is uncertain.

“The impact of Government cuts on consumer spending is still
unclear and we have yet to fully understand the impact of rising retail
selling prices on overall demand,” Next said.

Next also said that it may have to increase prices by around 8%
during 2011, due to rises in input costs and the recent hike in VAT,
suggesting that the clothing sector will continue to put upward pressure
on the UK’s CPI rate.

“We reconfirm that our own pricess will be increasing by circa 8%
as a result of higher input costs and the rise in VAT,” Next said.

There has been greater uncertainty than usual over how the UK’s
retail sales in the Christmas and New Year period have panned out, with
heavy pre-Christmas snowfall and the Value Added Tax hike looming.

The first of the UK retailers to report, John Lewis, saw department
store sales on the first three full days of Clearance (Monday Dec 27 to
end of Wednesday Dec 29), surged 26.2% on the year.

In terms of official recent sales data, the U.K. Office for
National Statistics said retail sales rose by a seasonally adjusted 0.3%
in November, after rising by 0.7% in October.

The leading pizza delivery chain, Domino’s Pizza, however, produced
more upbeat figures.

In the 13 weeks to Dec 26 sales were up 17.8%, outstripping growth
in 2010 of a whole of 11.9%. Analysts had predicted Domino’s would
perform strongly, with food home delivery resilient even during poor

–London newsroom: 4420 7862 7492 e:mail wwilkes@marketnews.com