Next Directory, often viewed as the shining star in online retail, has crashed down to Earth after the company blamed a double whammy of increased online competition and a major stock control cock-up for poor seasonal sales.
Overall, the group blamed warm weather for its poor performance, which saw sales fall 0.5% across Next stores in the 60 days to December 24.
The group now expects full-year profits to come in towards the bottom end at £817m, although this would still represent a 4.4% rise on the previous year.
But it is the sudden crash at Next Directory which has raised concerns among retail analysts.
Launched in 1988, after the group acquired the Grattan catalogue company, the first Directory issue was a hardback book containing 350 pages. There are over 770 pages in the Winter 2015 edition.
Online shopping was introduced in 1999, way ahead of rivals, and the entire book became available to shop from online, page by page – a first in home shopping in the UK. It now boasts over 3 million customers, and serves 70 countries outside the UK.
For years it has been seen as the leading exponent of online and catalogue shopping, regularly out-performing stores and leaving most of its traditional catalogue rivals struggling to capture the online market.
However, with the rise of firms such as Asos and Boohoo, and initiatives such as next-day delivery now being much more widely available from rivals, it seems the market has finally caught up with Next Directory.
In a statement Next said: “Whilst warm weather may have been the main reason for a difficult fourth quarter, we would not want to allow difficult trading conditions to mask any mistakes and challenges faced by the business.
“Specifically, we believe that Next Directory’s disappointing sales were compounded by poor stock availability from October onwards. In addition, the online competitive environment is getting tougher as industry-wide service propositions catch up with the Next Directory.”
Independent analyst Louise Cooper told Mail Online: “First of all Next is supposedly brilliant at logistics and is one of the reasons to buy the share. And so why did it have problems with stocking? And secondly the problem with consumers moving to online shopping is that they are only one Google search away from a competitor.”
