Boom or bust?

Next sales have soared this Christmas period by nearly 10 percent. Beating city forecasts, the unexpected rise in sales has led to higher profit forecasts for the year ahead. Analysts worried that slowing wage growth and heightened inflation would make Christmas shoppers tighten their budgets and spend less.

Next total sales saw a 1.5 percent increase in the 54 days up until Christmas Eve. This outlook resulted in share price increases in rival companies such as Marks and Spencers and Debenhams.

Next beat their own expectations for a fall of 0.3 percent of sales and analysts’ predictions of a 0.5 percent drop. The sales boom also jilted industry figures that had shown a sustained decline in shop footfall over the last month.

However, Next’s online sales were the saviour for the festive season. Huge online success follows an extra £12m invested into their mobile website and software in the last year.

The post-Christmas joy for Next follows an awful October, where warmer temperatures stunted shoppers spending on winter clothing. This provoked the decision to participate in Black Friday for the first time.

Chief executive, Lord Simon Wolfson expects the rise of online store spending to continue “for the foreseeable future.”

The retailer says that it will marginally lift its central profit guidance by £8m to £725m after the unexpected success of full-price sales, giving a new range of £718m to £732m.

Next faces many challenges this New Year, as it did last year, such as “subdued demand driven by a decline in real income, the increase in experiential spending at the expense of clothing and inflation in our cost prices.”

The retailer expects profit to be lower next year at £705m as operational costs grow quicker than sales. However, Next said they would hand £300m of surplus money back to investors via a share buyback in 2019.


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