NEXT festive sales exceed expectations jumping 5.7%

NEXT had a better than expected festive trading period with sales up 5.7% in the nine weeks to 30 December 2023, exceeding the high street giant's guidance of a 2% jump for the period.

On the back of the strong performance and an expected robust performance in January the retailer has upped its full year profit before tax guidance by £20m to £905m, up +4.0% versus last year.  Of the £20m increase, £17m came from the sales beat to date and £3m comes from an upgraded forecast for full price sales in January.

The company said that since stock had been well controlled it entered its end of season Sale period with -12% less surplus stock than last year and expected clearance rates over the life of the Sale to be broadly in line with last year.

NEXT said its online businesses had performed particularly well, which it attributed to service improvements. In the final quarter of the year online sales were up 9.1% with retail up 0.6% and over the second half of the year online was up 7.7% with retail flat. Overall sales were up 5.7% in the final quarter and 4.8% in the second half.

Looking ahead NEXT said it now expected full year full price sales to reach £4.8 billion (up 4%) while full tax profit before tax for the full year is now expected to hit £905 million (also up 4%). This guidance does not include the company's exceptional accounting (non-cash) gain of circa £110 million following its acquisition of the additional equity stake in Reiss. NEXT increased its stake in Reiss to 72% in September 2023.

Total Group sales, including subsidiary companies and equity investments, are expected to grow by +6.0%.  This turnover figure is calculated using NEXT's share of its subsidiaries' turnover.  For example, it own 74% of Joules so it includes 74% of its ales in the Group's top line.

NEXT said consumers were set to be boosted in 2025 as wages finally outstrip inflation, which “will ease the pressure they have felt on their cost of living for the last eighteen months”.

“On the face of it, the consumer environment looks more benign than it has for a number of years, albeit there are some significant uncertainties,” it said,

It cautioned there may be more unemployment over the coming year while many homeowners still face higher mortgage rates as they come off fixed deals.