Next buys too much stock

It seems that British fashion retailer Next has overestimated its rate of sales growth and has bought too much stock for this season. This could result in a £34 million hit to sales this Christmas, according to analysts at investment bank JP Morgan.

"This is only an estimate, and it could be higher, though I don't think lower. It follows straight through to the bottom line," Chiara Terzaghi of JP Morgen told the Independent on Sunday. The calculation was made after a detailed study of Next's muted update last month during which the company said that weak trading would not cease.

As a result, there has been market gossip that the group could release a profit warning during the coming weeks. Some banks have now downgraded the stock. According to the Independent on Sunday, Next is regarded as good indicator of how the UK clothing market is doing.