Next defies gloom and doom to post bumper festive sales: New Year cheer on the High Street as fashion chain hikes profits forecasts
Next led a wave of High Street firms defying economic doom and gloom with bumper sales over Christmas.
On an upbeat day for British retail, the company raised its profits forecasts for the year after revenues were £66million higher than anticipated in the nine weeks to December 30.
It came as Boots, Greggs and B&M Bargains all reported resilient Christmas sales – easing fears that the British High Street had suffered a festive bloodbath.
Christmas cheer: Next raised its profits forecasts for the year after revenues came in £66m higher than anticipated in the nine weeks to December 30
Meanwhile new figures from the British Retail Consortium (BRC) showed footfall in December was the highest since Covid struck.
Next chief executive Simon Wolfson said ‘sales in the Christmas period have been better than we anticipated’ and pointed to ‘light at the end of the tunnel’ for households facing steep price hikes.
He added: ‘The numbers speak for themselves in that people’s finances are better than they expected them to be.
‘I think that is partly because employment remains very strong.’
Wolfson had earlier warned of a 2 per cent drop in sales over the crucial nine-week period as cash-strapped shoppers faced soaring bills and higher prices.
But at Next they were 4.8 per cent higher than in the same period a year earlier, amounting to an extra £66million of revenues.
As a result, the retailer raised its profit forecast for the 12 months to the end of January by £20million, to £860million.
Shares in the company jumped 6.9 per cent, or 420p, to 6518p while High Street rivals were also on the rise.
Marks & Spencer was up 3.4 per cent, Primark owner AB Foods 4.3 per cent better off, JD Sports 3.1 per cent to the good and House of Fraser and Sports Direct owner Frasers Group climbed by 3.4 per cent.
Wolfson said that the shock sales jump was driven by ‘a dramatic boost’ in demand for coats, jackets and other cold weather products when temperatures plummeted.
He also suggested some respite was on the way for shoppers with price rises peaking at 8 per cent this spring and summer before easing to 6 per cent by autumn and winter.
‘I think that is very important for the UK economy,’ he said.
‘Because, as much as next year is going to be difficult, we can see the seeds of recovery have already been planted for the following year.’
He added: ‘If I look at the things that are of comfort, I think the strength of employment and employment opportunities in the UK is one of the things that is likely to moderate the effect of the fact that prices are rising faster than wages.’
Despite the green shoots, Next cut its forecast for the coming year as customers face rising energy bills, mortgage rates and prices at the till.
The usually-cautious retailer said that sales in the year to next January will fall by 1.5 per cent, with profit coming in at £795million.
Begbies Traynor partner Julie Palmer said: ‘Under-promising and over-delivering has become a hallmark of Next and the retailer has once again exceeded expectations with its Christmas trading.
‘Headed by Lord Wolfson, the company has a reputation as a bellwether of what’s really going on in the economy. Its sometimes cautious forecasts are one of the most reliable guides to the future.’
The BRC said that shoppers are returning to high streets in their droves.
While the number of visitors to high streets, retail parks and shopping centres last month was still below December 2019 levels, total footfall was 15.1 per cent higher than a year earlier.
BRC boss Helen Dickinson said rail strikes and plunging temperatures kept many shoppers at home.
But she hailed a ‘significant improvement’ on the previous two years when the pandemic turned high streets into ghost towns.