Next posts better than expected full-price sales rise

Next has defied predictions of a drop in full price sales in the lead up to Christmas with a better than expected rise of 1.5%.

In the 54-day period to 24 December, the high street giant posted full price sales which were up 1.5% on the prior year and which beat its own forecast of -0.3% – and that of a number of analysts – published in November.

Retail sales however were down -6.1% but Directory sales performed particularly well and were up 13.6% which Next said was due in part to the colder weather in December encouraging people to shop online instead of in-store.

For the 12-month period to 24 December the business achieved an overall increase in full-price sales of 0.2% with retail sales down -7.2% and Directory up 10.4%. As a result Next has upped its profit guidance for its full-year results to the end of January 2018 to between £718m to £732m, and where it falls within that range will depend on January trading.

It entered its post-Christmas clearance with a "well controlled" level of stock down -6% on the prior year. This included the stock it put into its first ever Black Friday event at the end of November, when a limited number of slow moving lines were marked down.

Despite the better than expected performance over Christmas Next remained cautious in its outlook for the coming year. "Many of the challenges we faced last year look set to continue into the year ahead. Subdued consumer demand driven by a decline in real income, the increase in experiential spending at the expense of clothing, and inflation in our cost prices remain challenges for 2018," its trading statement said.

"However, we believe that some of these headwinds will ease as we move through the year; we already know that cost price inflation will reduce to 2% in the first half and believe it will disappear in the second half," it added.

For the next financial year the business is budgeting for full-price sales to grow by between -2% and +4%. The mid-point of +1% would represent a modest improvement on this financial year's anticipated growth of +0.3%.