The retail giant posted a 4.8 per cent rise in full-price sales for the nine weeks to December 30, with that growth jumping to 17 per cent in the final two weeks, as the cold snap and resilient shopper confidence boosted its performance. It had previously guided for a 2 per cent fall in sales over the festive period. In a trading update, Next said it now expects full-year sales of £4.6 billion, up 6.9 per cent on the year before. Pre-tax profits are likely to rise 4.5 per cent to £860 million, against the £840m pencilled in last November.

However, the group cautioned that the year to January 2024 would be tougher as the cost-of-living crisis bites, guiding for pre-tax profits to fall 7.6 per cent to £795m on sales 1.5 per cent lower. Price rises are also expected and set to peak at about 8 per cent in the spring, but will ease back thereafter to “no more than” 6 per cent in the second half as currency pressures and freight costs decline.

Richard Hunter, head of markets at investment firm Interactive Investor, said: “Retail stores in particular were a highlight in the latter part of the year, with full-price sales rising by 12.5 per cent in the fourth quarter due to improved stock levels and the possibility of Next having underestimated the effect Covid had been having on store visits in the previous year. Online growth was more sedate, but with an additional contribution from finance interest income, which grew by 5.8 per cent, the overall growth was a pleasing end to a challenging period.”

Next chief executive Lord Simon Wolfson said festive trading was given a boost by pent-up demand after an unseasonably warm autumn. But he added consumer spending was also better than predicted in the face of painful cost pressures.

“Employment has held up very strongly - that’s unusual in a recession,” he said. “That has given people the confidence to spend through the Christmas period.”

Next warns of further clothing price hikes after festive rush boosts profits: reaction

Comments