Next increases profit forecast by £8m after surprise rise in sales over Christmas period
PUBLISHED: 08:48 03 January 2018 | UPDATED: 08:48 03 January 2018
Fashion chain Next has upgraded its profit forecast after a surprise rise in sales over the Christmas period.
The retailer says full price sales in the 54 days to December 24 increased 1.5%, ahead of expectations, which it put in part down to colder weather in the lead-up to Christmas.
High street sales declined by 6.1% in the period, but this was offset by a 13.6% jump in online sales.
As a result Next has increased its full year profit guidance by £8m to £725m – although this figure is still a far cry from last year’s £790.2m.
The trading update will come as a relief to the high street giant, which has been hammered by rising costs linked to the Brexit-battered pound and the resultant collapse in consumer confidence.
Chief executive Lord Simon Wolfson, a prominent Leave campaigner, has already said that cautious consumers were only buying “as and when they need” as trading remains “extremely volatile”.
However, the firm added that it believes “some of these headwinds will ease” through 2018, with inflation falling to 2% in the first half and disappearing in the second.
The retailer expects total full-price sales this year to nudge up 0.3%, rising to 1% next year.
Next is the first in a long list of sector peers due to report on Christmas trading in the coming weeks, with experts predicting that some firms could have to issue profit warnings.
Among the bevy of firms reporting figures are AO World, Morrisons, Sainsbury’s, Ted Baker, Tesco, Marks & Spencer, John Lewis, Debenhams, ASOS and Dixons Carphone.
Recent data has done nothing to inspire confidence for retailers, with figures from Springboard showing footfall in the last trading week before Christmas fell by 7.1% year on year, while on Boxing Day it plummeted 5.9%.
Next shares rose more than 8% to 4,893p in morning trading as investors welcomed the update.
Shares in other retailers were also up, including Marks & Spencer, Debenhams, Ted Baker and Primark owner Associated British Foods.