City forecast: how will UK retail bellwether Next have fared over the key festive season?

Major high-street retail name set to provide insight into of success of key festive trading period.

The retailer has seen shares jump 37 per cent since the beginning of the year. Picture: contributed.

Retail investors across the UK will be eyeing up Next's forthcoming festive trading update as they attempt to figure out how the Christmas period fared for the sector. The company will on Thursday January 4, reveal how its online store and physical shops performed in the run-up to the holiday.

It has been a year of success for the retailer, with shares up 37 per cent since the beginning of the year. Investors will be looking out for any news indicating that the latest guidance, which was unveiled in November, is not being missed. The company said it expects full-year, pre-tax profit to reach £885 million, with full-price sales rising 3.1 per cent.

Russ Mould and Danni Hewson at investment platform AJ Bell said: "While many retailers have whinged about the British weather in 2023, the FTSE 100 firm has got on with the job and raised guidance for both sales growth and profits on no fewer than four occasions in the past nine months.

"At its core, retail is about selling the right product at the right price point in the right format for the target customer base. Doing this correctly will improve stock turn and sell-through, reduce the need to discount, and in turn help profit margins and cash flow. Get it wrong and the opposite will happen – excess inventory will have to be shifted to the detriment of margin.

"Next seems to have the knack of getting this right and in this respect, its key performance indicator of growth in full-price sales is particularly helpful. This will be the first figure to which analysts turn, following on from the better-than-expected 4 per cent growth generated in the third quarter to the end of October."

The results come in a quiet week ahead for companies on London's markets, although Topps Tiles is also due to report its results this Thursday, but several other retailers should follow Next in the coming weeks, and hope to show that Christmas was positive after a tough year.