Next saw its shares slide nearly 6% to around 6770p after it issued a downbeat trading statement revealing sales undershot expectations in edging up just 0.4% on the same period in 2014.
The company said it had made ‘disappointing’ sales in the run up to Christmas due to the unusually warm late autumn and early winter. It also pinned the blame partly on stock management difficulties.
Rathbones owns an unspecified number of Next shares across various funds, and this is not going to change as a result of today’s news, Chillingworth said.
“The effect of the warmer than expected weather should not really have shocked analysts as it is clear warm weather does not help sales of companies like Next.”
“What was slightly unnerving is that stock management has not been as good as people would expect. On the positive side, gross margins held up,” Chillingworth noted.
Chillingworth said he believes the Next management team is ‘very high quality’ and will quickly learn lessons from the recent difficulties.
“The investment community will believe that the management can sort the problems out and it is a very cash generative business so there is plenty to support holding the stock still while we wait for further updates.”