High street bellwether retailer Next has revealed Christmas trading in line with expectations with sales up +1.5% in the trading period between 28 October and 29 December.
The results show the continued swing to online with e-commerce full-price sales up +15.2% and full-price retail sales down -9.2%.
“Online sales (including interest income) were £17m (+2.2%) ahead of our expectations and Retail sales were £16m (-1.7%) below,” the company said.
Next said the last three weeks of trading prior to Christmas and a strong autumn half term in October had made up for weak sales in November that had hit much of the high street.
Going into its clearance sale, stock was up +3% and clearance rates were broadly in line with expectations, it said.
However the increased online sales led to increased costs and, partly as a result of this, the retailer has revised down its profits forecast for the full year.
“Our central guidance for full year profit is now £723m, 0.6% lower than our previous guidance of £727m. The £4m difference is a result of two factors. Firstly, higher sales on seasonal products, such as personalised gifts and Beauty products, reduced margin by £1.5m. These areas make a healthy net margin but lower than our clothing ranges. The remaining £2.5m reduction came as a result of the increased operational costs associated with the higher Online sales,” the company explained in a trading statement released this morning (3 January).
Central guidance for full price sales growth (including interest income) is +1.7%, in line with the second half performance of the current financial year, Next added. Looking forward the business said it was assuming “a similar economic environment as that experienced in the second half of the current year. Within this guidance, we expect Retail sales to be down -8.5% and Online sales to be up +11%.”
At this level of sales growth, Next said it anticipated group profit would be £715m, a decline of 1% on the profit forecast for the current financial year.
It added a caveat to its forecasts that any statements made now came with a high degree of uncertainty as a result of the lack of clarity around Brexit. “This year uncertainty around the performance of the UK economy after Brexit makes forecasting particularly difficult. We have not factored into our sales estimates the potential benefits of a smooth transition or the downsides of a disorderly Brexit,” it said.
Next’s numbers come after another high street bellwether John Lewis posted strong sales, up +4.5%, for the Christmas week from 22 December to 29 December yesterday. However the department store will present a clearer picture for the full six-week Christmas trading period on 10 January.