* Next 2012-13 profit 621.6 mln stg, in line with forecasts
* Next says first few weeks of new year quiet
* Next tempers 2013-14 sales growth guidance to 1.5-4 pct
* Hennes & Mauritz Q1 profit down 13 pct
* Ted Baker makes good start to new year
By James Davey and Anna Ringstrom
LONDON/STOCKHOLM, March 21 Two of Europe's
biggest fashion retailers, Next and Hennes & Mauritz
, have endured a tough start to the year, hit by a
combination of unhelpful weather and economic headwinds.
Retailers across Europe are battling a prolonged squeeze in
consumer incomes as governments try to reduce their deficits.
Freezing wet weather has also discouraged shoppers.
In Britain, two thirds of GDP is generated by consumer
spending so a poor first quarter would increase the chances of
the country dipping into a third recession in four years.
Next, Britain's second-biggest clothing retailer,
said on Thursday that trading since the start of February was
quiet, with sales at the bottom of a 1-4 percent target growth
range for 2013-14. It had issued an annual growth target of
1.5-4 percent in January.
It also reported a 9 percent rise in 2012-13 profit, in line
with previous guidance.
Hennes & Mauritz, Europe's No. 2 fashion retailer, said it
will speed up store expansion in the face of weak European
demand after unusually big markdowns pushed profits down by 13
percent in its first quarter, more than expected.
Next, known for making and achieving precise earnings
guidance, said it expected sales to pick up.
"Unusually cold weather is definitely suppressing sales of
summer stock that we'd normally be selling," Chief Executive
Simon Wolfson told Reuters.
"How much difference that will make, we'll only know when we
see some warmer temperatures and more spring like weather."
Wolfson said the firm is budgeting for sales in existing
stores to be moderately less in the 2013-14 financial year than
in the previous year, with growth in sales coming from new space
and the firm's Directory online and catalogue business.
He expects Britain's consumer environment to remain subdued.
"As long as inflation is moving ahead faster than wages then
people are going to have to save money from their discretionary
spend in order to fund their essential spend," he said.
Shares in Next, up 43 percent over the last year, were up 3
percent, helped by a slightly better than expected dividend.
"The warning that the first few weeks of the year have been
quiet has negative read across to Marks & Spencer and
Debenhams," said Investec analyst Bethany Hocking.
Shares in M&S and Debenhams were both down 1 percent.
Hennes & Mauritz CEO Karl-Johan Persson said the December to
February period was challenging because of a "continued tough
macro-economic climate, but also due to unfavourable weather
during parts of the quarter."
H&M warned that March sales have also been hit by cold
weather. Analysts expect double-digit like-for-like declines in
its sales this month.
SOME GOOD NEWS
Although British department store operator Debenhams issued
a profit warning earlier this month, not all fashion retailers
have made weak starts to 2013.
On Wednesday, British online fashion firm ASOS
posted a 37 percent rise in second-quarter sales, highlighting
stand-out performances from France and Germany.
On Thursday, British designer brand Ted Baker,
posted a 17 percent rise in 2012-13 annual profit and said its
new financial year had started well.
Also on Thursday, official data showed British retail sales
volumes in February rose 2.6 percent year on year - the
strongest rise since March 2012.
Next made underlying pretax profit of 621.6 million pounds
($940.6 million) in the year to the end of January on sales up
3.1 percent at 3.5 billion pounds.
Earnings per share rose 17 percent to 297.7 pence, partly
reflecting a 241-million-pound share buyback. The dividend was
raised by 16 percent to 105 pence.
It said it expected 2013-14 pretax profit of 615-665
million. The bottom of that range would represent a fall of 1
percent and the top figure would be a gain of 7 percent.