Next has increased its profit forecast for the year after experiencing better than expected sales over Christmas.
Full-price sales between 27 October and 28 December were up by 5.2% year on year, 1.1% ahead of its forecasts. The high street retailer now expects annual profits of around £727m, up 0.6% compared to last year.
However, the results tell two very different stories about the performance of online versus the high street. Online sales were up 15.3% year on year in the Christmas trading period and have increased by 12.1% in the financial year to 28 December.
However, sales in stores fell by 3.9% over Christmas and 4.6% in the year so far. Overall, Next expects sales to grow 3.9% over the current financial year, which runs to the end of January.
Richard Lim, CEO of Retail Economics, says: “This was an impressive end to the year as Next’s outstanding online business continues to set it apart from the competition. The retailer is benefitting from years of investment in its digital proposition, continually evolving its business model to meet shopper’s heightened expectations.
“There’s no doubt that more Christmas shopping was done online this year than ever before and Next has positioned itself to capitalise on the increasingly complex customer journey. Consumers expect to be able to seamlessly shop across a multitude of physical and digital channels, often at the same time, and the retailer has embraced this new reality.”
High street bellwether
Next is seen as a bellwether for the performance of the British high street. And while its results suggest things may not have been as bad as analysts feared, its strong online business has clearly helped sales. Other high street retailers with weaker ecommerce businesses might not get such a boost.
The high street is thought to have struggled over Christmas, with data from Springboard finding that footfall to UK high streets declined by 2.1% in December. That was despite retailers offering big discounts both around Black Friday and in the run-up to Christmas.
Retailers including John Lewis, Tesco, Marks & Spencer and Ted Baker are set to release their Christmas trading updates next week.