Next reveals better-than-expected Christmas results

Next Christmas

Next has unveiled better-than-expected results for its crucial Christmas trading period, despite another period of sales decline across its bricks-and-mortar estate.

For the fourth quarter ending December 29, the fashion retailer reported a one per cent rise in product full-price sales.

This was attributed to a 15.2 per cent surge in online sales, and although in-store sales declined 9.2 per cent, this was much better than the 13 per cent decline that industry analysts had predicted.

Meanwhile, when accounting for interest income to Nextpay customers, Next said total full prices sales for the Christmas quarter rose 1.5 per cent.

“Strong sales in the three weeks prior to Christmas along with a good half-term holiday week at the end of October made up for disappointing sales in November,” Next said.

The bellwether retailer also revealed preliminary full-year results in its Christmas trading update.

It expected a 2.6 rise in product full-price sales, or a 3.2 per cent rise on a total full-price sales including interest income basis.

Next said this was boosted by a 14.9 per cent increase in online sales, which helped offset the seven per cent slump in in-store sales during the year.

The fashion chain also downgraded its full-year profit forecast to £723 million, from the £727 million previously expected.

It said the profit downgrade was a result of selling more seasonal products, such as personalised gifts and beauty products, which make a lower profit margin than its clothing ranges.

Next added that it faced higher operational costs on its online sales.

Additionally, its estimates for the new financial year comprised of a one per cent fall in profits while sales could slow down to a 1.7 per cent growth.

“In the year ahead, we are assuming a similar economic environment as that experienced in the second half of the current year,” Next said.

“Within this guidance, we expect retail sales to be down 8.5 per cent and online sales to be up 11 per cent.”

Next warned that these predictions came with a “high degree of uncertainty” and did not factor in the “potential benefits of a smooth transition or the downsides of a disorderly Brexit”.

The retailer said it would publish its full-year report on March 21.

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