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Next's full-price strategy sees sales increase 2.9% and profit forecast rise

Next increased sales by 2.9% for the two months to Christmas Eve and said profits are likely to be ahead of the revised guidance announced at the end of October.

The retailer, which trades from more than 500 stores in the UK and Ireland, almost 200 stores overseas, and via its online and catalogue Directory arm, took a firm stance against pre-Christmas discounting and started its traditional Sale on Boxing Day.

Its retail sales increased by 0.5% during the period, while its Directory sales increased by 7.5%. Trading for much of November was unreliable, but since the end of that month every week posted an increase on the previous year, topped by a significant rush in the last few days (which was distorted by the extra day of pre-Christmas trading).

The mild autumn caused Next to enter its end-of-season Sale with “significantly more stock” than last year, but it said clearance rates are in line with expectations so far.

Next expects full-year profits to January 24 to be £775m, which is £5m more than the revised forecast in October.

“The economic outlook for the UK consumer looks relatively benign,” said the company statement. “Low inflation, an end to real wage decline, healthy credit markets and strong employment all paint a somewhat more positive picture than recent years.”

“However we remain very cautions in our sales budgets for the year ahead. In spring and summer the company will face very tough comparative numbers.”

Next announced it will pay a special dividend of 50p per share on February 2. It has already paid three special dividends during the year to date, each of 50p, accounting for £223m in total.

Neil Saunders, managing director of retail research company Conlumino, commented: “The figures are a vindication of Next’s refusal to engage in pre-Christmas discounting, including the popular Black Friday event. While this may have cost Next some sales growth over the reported sales period, we believe that it has not lost it much, if anything, in terms of profits.

“In many ways, the Next figures reflect the wider trend of Christmas, namely that the high street performed reasonably but was saved by online and multichannel which boosted retail sales. Next’s multichannel proposition is well developed and allows customers to seamlessly shop across stores and online - this stands in contrast to some of its rivals in the clothing space.”

Readers' comments (3)

  • Next shows how it should be done. Discounting is for fools.

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  • Mick Harwood

    Well done Next. Hopefully more will take your lead next year.

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  • That's right I also have a online store name Sky-Seller and Sales increases 2.5% at Christmas month specially for discount.

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