Next has marginally increased its profit guidance despite falling retail sales in the run-up to Christmas.
The under-pressure mid-market retailer marginally upgraded its profit guidance for the current year, increasing the mid-point of its guidance from £717m to £725m. Its profit guidance window now stands at £718m to £732m.
It attributed this rise to better than expected full-price sales, which rose 1.5% in the 54 days to December 24, 2017.
This rise beat Next’s own, typically downbeat prediction of -0.3%.
Full-price retail sales continued to fall, shrinking 6.1% over the period. However, this represents a slowdown on the year to Christmas Eve, during which sales dipped 7.2%.
Online full-price sales shot up 13.6% over the festive period, up from a 10.4% rise during the year to Christmas Eve.
The fashion retailer partook in Black Friday for the first time during 2017, although its Sale was limited. Today, it said stock for the end-of-season Sale including Black Friday was “well-controlled” and down 6% on the previous year.
The year ahead
Despite the better than expected festive trading figures, Next warned “many of the challenges we faced last year look set to continue into the year ahead”.
The retailer picked out “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” as particular challenges.
Despite that, it is predicting full-price sales to grow between -2% and 4%, with a mid-point of 1% representing a slight improvement on its current year growth, which it expects to be 0.3%.
It added that while it was “very early” to issue profit guidance for 2018, if sales grew at 1% then profit would be around £705m. This is a decrease on its guidance for this year, due to rising costs.