Snow costs Next £22m in sales but profits will still rise - Telegraph.co.uk

While the current austerity package that has been introduced by the Coalition Government is likely to damped demand, Lord Wolfson said that it is unlikely to derail the economic recovery.

"The quantum of cuts - around £20bn a year - is not enough in a consumer market of over £1 trillion to make a big difference," he said.

He said that he believes the government has got its recovery package "broadly right" and that it is trying to reduce the country's debt as quickly as possible without providing an economic shock to the UK.

Analysts said that the results were a "mixed bag".

In a note to clients Barclays Capital said: "During the first two weeks of December like-for-like sales were down more than 10pc [in the stores] due to the snow in many areas in the UK. Store sales were also impacted by the fact that the management moved stock to Directory from Retail trying to react quickly on the increased online demand and the weak stores footfall in the beginning of December. As a result stock availability was low in some of the more popular lines at Retail."

Maureen Hinton, an analyst at Verdict Research, said that Next is along many retailers who could justifiably blame the weather for a lacklustre performance. However she said that Next has kept a "tight control" of its stock.

"This meant that although it was unable to maximise sales of best selling lines during Christmas trading, it did not go into the Sale period with excessive amounts of unsold merchandise and very deep discounting. This is likely to be a key reason for the retailer announcing that it has kept to its profit forecast for the year ending January 2011," said Ms Hinton.

"Importantly Next remains transparent about price rises, reconfirming prices will rise by circa 8pc as a result of higher input costs and the VAT rise. This transparency will encourage other retailers to follow suit and will confirm the major change in UK clothing retail from one of deflation to a new period of increasing inflation."

Charles Stanley, the broker, said that the comments from Lord Wolfson were "characteristically cautious". However it said that recent share price weakness was an opportunity to buy the shares.