Online sales are a lifeline for Next

But slump in stores casts shadow over High Street

SHARES in Next rose sharply after it enjoyed a better than expected Christmas.

The retailer’s shares rose as much as 7pc in early trading as it revealed a strong performance online offset a slump in sales in its stores over the crucial festive period.

Next chief executive Lord Wolfson said there was ‘very little evidence’ of households reining in spending, adding: ‘The consumer is not in a bad place.’

The comments offered a glimmer of hope for the embattled retail industry just a day after John Lewis reported steady sales growth during the two weeks to December 29.

Shares across the sector rallied, with Next closing up 4.1pc while Marks & Spencer gained 1.3pc and Debenhams jumped 9.5pc.

Online-only firm Asos climbed 5.7pc and Joules rose 5.3pc.

But analysts warned that a number of retailers were still likely to have endured a tough Christmas, with attention now turning to trading updates from M&S and Debenhams next week.

George Salmon, equity analyst at Hargreaves Lansdown, said: ‘So far we’ve had some unexpectedly positive noises from Next, but then it was ahead of the pack last year.

‘Given the troubles affecting the wider high street and Marks & Spencer’s lack of a material online offer, it will come as no surprise to hear we’re not expecting pretty things from Marks next week.’

Many retailers have been preparing for a make-or-break Christmas period after what Sports Direct tycoon Mike Ashley claimed was the worst November on record for the High Street. Next said that full-price sales between October 28 and December 29 were 1pc higher than in the same period the previous year.

Business was buoyed by a 15.2pc boost in online sales.

But sales in its 500-plus stores fell 9.2pc. Next refused to slash prices in the run-up to Christmas, in contrast to rivals such as Debenhams, M&S and John Lewis, which all started their sales early. Analysts at UBS said: ‘Overall, the performance showed the benefit of holding full price for as long as possible.’

But Next was forced to downgrade its full-year profit expectations after a range of new products, including gifts and personalised T-shirts, ate into the company’s earnings.

Next now expects full-year profits to come in at £723m, compared to £727m originally forecast. Predicted sales growth is unchanged at 3.2pc but expected to come in at just 1.7pc in 2020. Echoing Ashley, Wolfson, 51, said: ‘November was very disappointing. To some extent the money that was not spent in November we found was spent in December.’

He shrugged off wider concerns that consumers were spending less due to Brexit.

‘People are talking about a subdued consumer, but there’s very little evidence,’ he said.

‘People are maybe a little bit more cautious given the uncertainties around Brexit, but I think that’s as strong as you can put it. The consumer is not in a bad place, there’s not cause for wider concern.’

Richard Hunter, head of markets at Interactive Investor, said Next had managed to stage a late recovery.

‘This is a business which operates on fine margins,’ he said. ‘Indeed, even a relatively successful Christmas period of trading was crimped by higher sales on seasonal products, where margins are lower and also by increased operational costs.

‘Whether Next can regain some of its former glories remains to be seen amongst its management of so many moving parts.’

Laith Khalaf, senior analyst at Hargreaves Lansdown, added: ‘Next has delivered some Christmas cheer to the retail sector, but only because its online offering is doing so well.

‘Numbers from the High Street stores look pretty dire.’

IN a vote of confidence for the retailer, Next’s chairman Michael Roney snapped up 3,577 shares last night. Roney, 64, forked out more than £155,500 for the shares.