High street looks to Next update to ease retail gloom

The group is forecast by analysts at Seymour Pierce stockbrokers to have seen 4.1 per cent growth in revenues at its 520 UK and Ireland stores in the three months to 24 December, compared with a 3.3 per cent drop in the previous quarter. This will equate to a 1.8 per cent decline in like-for-like sales on a year earlier.

While this figure is flattered by the weak sales a year ago, when extreme weather conditions battered the retail sector, the group is also expected to report 9.3 per cent growth at Next Directory, its catalogue and online business.

Later in the month, luxury goods giant Burberry, fashion firm SuperGroup and the supermarkets are expected to boast stronger performances through the crucial festive season, while Argos owner Home Retail Group, entertainment group HMV and Mothercare are predicted to reveal a Christmas flop.

Next’s fourth-quarter update will come amid much gloom for the retail sector, which has seen a series of profit warnings from the likes of Thorntons and HMV in recent weeks as well as companies such as D2 Jeans falling into administration.

Seymour Pierce analyst Kate Calvert said: “We believe Next will grow market share and the performance of Directory over the period is expected to show the strength and flexibility of its multi-channel business model.”

Next has openly passed on price rises to customers and kept profit margins intact, despite a perfect storm of rising commodity prices and higher VAT. The group recently said it was confident there would be no further increase in selling prices in the first half of 2012.

It is expected to report pre-tax profits of £568 million for the year to January, against £551m a year earlier, a 3 per cent increase.