Every year history repeats itself. Christmas trading is talked up, a stream of statements gradually emerge, and they are mostly misinterpreted. This year is no exception. These statements at headline level are about as indicative of where we really are and might be soon as the Premier League Table is after two games at the start of the season.
Christmas trading statements are unaudited and produced internally. I’m not suggesting that they are simply made up – God forbid!! However, there is latitude to adopt a flexible approach with definitions and timeframes. And there is massive pressure to deliver what a company’s stakeholders want to see. Goalposts are regularly picked up and plonked down in a different spot. Definitions and timeframes can be adjusted to suit.
Beyond this, the obsession with year-on-year comparisons has encouraged most people to look at the headline percentage figures, and ignore the absolute numbers on which they are based. So Next’s numbers last week have been massively misread. That’s not to say they were not poor and disappointing. However, Next is still light years ahead of its peer group on virtually every issue that counts, and when it comes to its future trading performance, that point is by far the most critical. There will be quite a few retailers posting numbers far better than Next’s. Don’t be fooled by the packaging and look at the contents!
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