Next ups profit guidance as Christmas sales beat expectations

Next reported that full-price sales rose 4.8% year on year in the nine weeks to December 30.

This amounts to approximately £66m more than previously expected when the retailer anticipated sales could slip 2% over the period. 

The strong showing prompted Next to up its full-year profit guidance by £20m to £860m, a 4.5% improvement on the previous year.

However, the fashion and home retailer said it remains “cautious in our outlook”.

In the financial year just starting and ending in January 2024, Next anticipates full-price sales will be down 1.5% and pre-tax profit will be down 7.6% at around £795m.

It said online and store divisions both exceeded expectations, with the latter being “particularly strong”. Online sales edged up 0.2% in the quarter, while the retail division was up 12.5%.

There was a “dramatic boost” to sales during the cold period in December, which the retailer believes reflected pent-up demand “from an unusually warm October and November”.

Next said that demand in the new financial year may be hit by “inflation in essential goods, particularly energy”,  “rising mortgage costs as consumers’ fixed interest rate deals expire” and “continued price inflation in our own products”.

The retailer expects cost price inflation on like-for-like goods to peak at around 8% in the spring/summer season but to be “no more than 6% in the second half”.

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