Christmas brings sales present for embattled retailer
Fashion chain Next has posted a rise in sales over Christmas as the retailer upgraded its profit forecast and signalled that inflation pressures are set to ease.
The high-street giant said fullprice sales in the 54 days to December 24 increased 1.5%, ahead of expectations.
Part of the improvement, the company said, was down to much colder weather leading up to Christmas.
Next saw online sales jump 13.6% in the period, helping mitigate a 6.1% decline in high-street sales.
As a result, Next has increased its full-year profit guidance by £8m to £725m, although the figure is still a long way off last year’s £790.2m.
The trading update will come as a relief to the retailer, which has been hammered by rising costs linked to the Brexit-battered pound and the resultant collapse in consumer confidence.
“Many of the challenges we faced last year look set to continue into the year ahead,” Next said.
“Subdued consumer demand driven by a decline in real income, the increase in experiential spending at the expense of clothing, and inflation in our cost prices remain challenges for 2018.”
Chief executive Lord Simon Wolfson – a prominent Leave campaigner – has already said that cautious consumers were only buying “as and when they need” as trading remains “extremely volatile”.
However, the firm added that it believes “some of these headwinds will ease” through 2018, with inflation falling to 2% in the first half and disappearing in the second.
The retailer expects total fullprice sales this year to nudge up 0.3%, rising to 1% next year.
Next is the first in a long list of sector peers due to report on Christmas trading in the coming weeks, with experts predicting that some firms could have to issue profit warnings.
Among the bevy of firms reporting figures are AO World, Morrisons, Sainsbury’s, Ted Baker, Tesco, Marks & Spencer, John Lewis, Debenhams, ASOS and Dixons Carphone.
Recent data has done nothing to inspire confidence for under-pressure retailers, with figures from Springboard showing footfall in the last trading week before Christmas fell by 7.1% year on year, while on Boxing Day it plummeted 5.9%. SURGING retail stocks inspired a rebound on the London market after investors cheered a stellar festive performance from Next.
The FTSE 100 Index closed up 23.01 points to 7,671.11, bringing the market within 16.6 points of securing a fresh all-time high.
Next was the biggest riser, lifting more than 6% or 300p to 4,800p, after the fashion chain posted a surprise festive sales rise and upgraded its profit forecast.
The high street bellwether said fullprice sales in the 54 days to December 24 increased 1.5%, ahead of expectations, with part of the improvement down to much colder weather leading up to Christmas.
The group saw online sales jump 13.6% in the period, helping mitigate a 6.1% decline in high street sales.
As a result, Next has increased its full-year profit guidance by £8 million to £725m, although the figure is still a long way off last year’s £790.2m.
The outcome helped boost the retailer’s rivals, with Primark-owner Associated British Foods climbing 58p to 2,837p and Marks & Spencer up 4.4p to 320.5p.
Equipment rental giant Ashtead Group was in the ascendancy, rising 38p to 2,004p, after being handed a broker upgrade from Credit Suisse.
Away from the top-flight, AIM-listed Plus500 enjoyed a strong session after the online spreadbetter said it would outstrip expectations after reaping the rewards of the cryptocurrency boom. The company saw strong volumes of contract for difference trades (CFD) in cryptocurrencies, such as Bitcoin, while new customer numbers more than doubled to 246,000 last year. Plus500 finished more than 24% higher, or 218.5p to 1,100p, with annual revenues and profits set to come in ahead of market forecasts.
The biggest risers on the FTSE 100 were Next up 300p to 4,800p, Just Eat up 33.4p to 810.4p, Experian up 36p to 1,635.5p, and Associated British Foods up 58p to 2,837p.
The biggest fallers were Antofagasta down 25.8p to 975.2p, WPP down 33.5p to 1,303p, Fresnillo down 35p to 1,400p, and Randgold Resources down 152p to 7,294p.