Next has strong Christmas after shunning Black Friday

Next provides early indication that high street had solid Christmas

Next has strong Christmas after shunning Black Friday
Next sales rose 2.9pc year-on-year in the run-up to Christmas Credit: Photo: Jane Mingay

Next has calmed fears that the high street suffered a difficult Christmas due to widespread discounting by reporting a solid increase in sales.

The FTSE 100 high street retailer said that sales rose 2.9pc year-on-year between October 28 and December 24, which was at the top end of City expectations.

Shares in Next rose by 220p, or 3pc, to £67.35 following the update.

The figures from Next provide the first evidence that the high street enjoyed a better Christmas than feared. Warm weather in autumn and widespread discounting on Black Friday in November prompted fears that clothing retailers could struggle to sell products at full-price. Next was forced to issue a profit warning in October as the warmer-than-average weather dampened demand for winter coats and jackets.

However, Lord Wolfson, chief executive of Next, said that sales of winter clothing was boosted by a drop in temperatures before Christmas and a late surge in online orders.

“Funnily enough we finished broadly where we said we would start,” Lord Wolfson said of the company’s performance. “In the context of the start of the year, I am really pleased. In the context of where we thought we could get to in the middle of the year, I am disappointed.”

The increase in Next sales included a 0.5pc rise in store sales and a 7.5pc uptick in its online business, Next Directory. For the financial year from the end of January to December 24, Next sales were up 7.7pc.

The performance of Next over Christmas and in the early stages of its Boxing Day sale means Lord Wolfson increased the forecast for the company’s annual profits by £5m to £775m. This represents an 11.5pc rise on last year’s profits. Lord Wolfson also announced that Next, which has returned £361m in share buy backs and special dividends over the last year, will pay another 50p dividend on February 2.

Although Next’s figures will boost hopes that rival high street chains such as Marks & Spencer also enjoyed a robust Christmas, the retailer has consistently outperformed its rivals in recent years. Next also avoids discounting products until December 25 and shunned the Black Friday sales, although Lord Wolfson said the company benefited from the overall uptick in retail sales.

“On Black Friday itself, we had a very good day. We think people took the day off work to go shopping,” he stated.

Nick Bubb, retail analyst, said: “Just like last year, Next has managed to allay fears about the impact of the apparent discounting frenzy pre-Xmas on the high street.”

However, Tony Shiret at BESI, said he was a “little surprised” that Next did not upgrade its profits forecast more given the growth in sales.

He said: “We felt that the Next retail sales were better than might have been expected and that this should have had more gearing to the bottom line.

“For us the significant debate here is the extent to which the first half decline in credit customer numbers has been addressed as these are central to the profitable growth of UK Directory.”