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London (AFP) Jan 5, 2011 British fashion retailer Next and entertainment chain HMV revealed on Wednesday that their sales fell sharply during the crucial Christmas period because of heavy snow and tough trading conditions. Next said in a trading update that it had suffered about 22 million pounds (26 million euros, 34 million dollars) in lost sales because of snow. "Retail sales were significantly affected by extreme weather conditions and increased competitor discounting on the high street before Christmas," Next said in an official statement. "We estimate that we lost 22 million pounds of full price sales as a result of the snow -- representing 2.2 percent of the season's total sales." As a result, like-for-like sales -- stripping out the effect of new floor space -- sank by 6.1 percent between August and December 24, compared with the equivalent part of the previous year. "Retail sales were also somewhat affected by limited stock availability on best-selling lines in the run up to Christmas," it said. However, Next forecast that annual pre-tax profits would increase by as much as 10 percent in the current financial year to the end of January. But music and entertainment group HMV also unveiled tumbling sales on Wednesday owing to recent bad weather. HMV said in a statement that like-for-like sales in Britain and Ireland slumped 13.6 percent in the five weeks to January 1, and forecast annual profits at the low end of market expectations. The group acknowledged that its sales were "significantly undermined" by freezing weather conditions over the key festive break. "The challenging entertainment markets, combined with the severe weather over our peak trading period have had a negative impact on our trading year to date," HMV said. "In addition, there are well-reported consumer headwinds as we enter 2011," it added. Next agreed that the 2011 outlook was "uncertain" amid deep government spending cuts and an increase to sales taxation, or value-added tax (VAT), which took effect on Tuesday. "The outlook for 2011 is uncertain. The impact of government cuts on consumer spending is still unclear and we have yet to fully understand the impact of rising retail selling prices on overall demand," it said. "We reconfirm that our own prices will be increasing by circa 8.0 percent as a result of higher input costs and the rise in VAT. "Our best guess is that price rises will moderately suppress like-for-like sales."
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