NEXT UPBEAT ON CONSUMER SPENDING AFTER STRONG SALES
NEXT set an optimistic tone for festive trading with better-than-expected fourth-quarter sales.
Britain’s second largest clothing chain, seen as a retail bellwether, showed shoppers were still willing to pay full price for its ranges as it resisted joining rivals in discounting products.
Chief executive Simon Wolfson said: ‘It never makes sense to us to discount before Christmas.’
The retail giant was the first to offer a snapshot of trading on the high street.
Wolfson, a Conservative party peer, was cautious about trading over the next six months because of strong sales this time last year, but welcomed an end of real wage deflation.
He said: ‘Low inflation, an end to real wage decline, healthy credit markets and strong employment all paint a somewhat more positive picture than recent years.
‘We remain very cautious in our sales budgets for the year ahead. The UK political outlook and turbulence in the international economy present potential downside risks.’
In October, Next issued its first profit warning for two decades due to unseasonable warm autumn weather. However sales rose 2.9pc between October 28 and December 24 causing it to adjust forecasts once again.
It now expects full-year profit to be within £10m either side of £775m, which is £5m ahead of guidance issued in October.
The bulk of its fourthquarter sales was due to strong performance from its Next Directory catalogue and online business which saw a 7.5pc rise in sales.
The stores business only grew by 0.5pc.
Wolfson said the winter sale had started well with ‘significantly more stock than last year’, due to the warm autumn.
The shares rose 3.22pc or 210p to 6725p after it announced its fourth special dividend this year at 0.50p-a-share.
Independent retail analyst Nick Bubb said: ‘Next’s initial view on 2015/16 is cautious, despite a relatively benign UK economic outlook, but it is still confident enough to declare another 50p special dividend and raise its indicative share buyback limit from £64.25 to £67, so there is plenty here for the City to be pleased with.’