Next to kick off trading updates

Speculation over the impact of snow and weak consumer confidence on the retail sector will finally end next week with the first of a deluge of trading updates from the high street, including Next and Clinton Cards.

Next delivered a surprise on Christmas trading a year ago, but with snow adding to pressure on household spending, the chances of a similar boost in Wednesday’s festive sales update seem more remote.

Instead, the fashion chain is likely to have fared better in the post-Christmas sales period, as evidence has pointed to a busier period for retailers with shoppers prepared to bring forward purchases before the January VAT rise.

Wednesday’s trading update only covers the 24 weeks to Christmas Eve and analysts will hope the company provides some additional comment on trading in that crucial sales period, as well as further guidance on margins in 2011.

The company has already warned of little sign of an end to the bubble in cotton prices with shoppers braced for price tags to rise by up to 8% in 2011.

Disruption caused by the recent snow has made forecasts difficult, but analysts at UBS predict a drop of 4.5% in retail like-for-like sales in the 24 weeks to Christmas Eve. This includes an already-reported third quarter decline of 3.3% and suggests a fall of around 6% in recent weeks as Next battled tougher comparisons with a year ago, as well as the weather conditions.

Last week, fashion chain Alexon issued a profits warning after it said the icy roads and pavements meant shoppers were unable to reach its stores.

In September, Next guided commentators towards a drop in second half retail like-for-like sales of between 1.5% and 4.5%.

At the Directory arm, which has consistently outperformed the rest of the business, sales are expected to be around 6% higher in the 24 weeks.

Panmure Gordon analyst Jean Roche said: “Next has offered free delivery online as a promotional tool this Christmas season so we will be watching out for any margin-related comments.”