High street stalwart Next has further hiked its profit forecast after posting stronger sales than predicted in the closing months of 2019.
The fashion chain shrugged off the retail sector blues to post a 5.2 per cent increase in full-price sales for the fourth quarter to 28 December, which it noted was 1.1 per cent ahead of company forecasts.
Next said it believes its sales for the Christmas period were boosted by a “much colder November than last year and improved stock availability” in both retail stores and online.
Meanwhile, full-price sales for the 11 months to the end of December rose by 3.9 per cent as the group also predicted sales growth would surpass previous expectations. It expects sales to continue to be 3.9 per cent higher by the end of the financial year, 31 January, up from the previous guidance of 3.6 per cent growth for the year.
Total sales in physical stores slipped 4.6 per cent over the year-to-date, while they were 3.9 per cent lower for the two months to December.
However, the performance was buoyed by continued online growth, as digital sales leapt 12.1 per cent in the year-to-date, driven by a 15.3 per cent surge in the most recent period.
FTSE-100 listed Next said it now expects to post a full-year profit of about £727 million, nudging up its previous forecast by £2m. This would represent an increase of 0.6 per cent on the previous year and earnings per share growth of 5.4 per cent.
Analysts at brokerage Shore Capital noted: “This is another reassuring trading statement from a well managed company. Online sales growth accelerated highlighting the benefit of click and collect through the store network.
“The retail decline was better than expected and online sales growth offset the retail drag, growing overall Next sales ahead of plan, which has led to the marginal earnings upgrade given the leverage in the business.
“With many retailers reporting in the week ahead, we will be able to benchmark Next’s performance but as ever, clothing and home retailer Next has delivered a relatively upbeat trading statement in tough trading conditions in the golden quarter.
“In our view, this shows both the relevance of the customer proposition and the strength of the capable management team led by [chief executive] Simon Wolfson and [finance director] Amanda James.”
Richard Lim, chief executive of Retail Economics, said: “This was an impressive end to the year as their outstanding online business continues to set them apart from the competition.
“The retailer is benefiting from years of investment in their digital proposition, continually evolving their business model to meet shoppers’ heightened expectations.”