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Next beats Christmas hopes

Next posted a better than expected Christmas sales performance, with like-for-like retail sales ahead 1.6% in the 22 weeks ended Christmas Eve.

Like-for-like sales including performance from the mail order Next Directory division, were ahead 3.2% over the period.

Total retail sales grew by 4.6% while total Directory sales were up 6.8%. Combined this resulted in total group sales ahead 5.3% for the 22 weeks.

Next upgraded its full year profit forecast from £490m to £500m on the back of its strong performance, which it put down to its improved ranges on top of the fact that consumer confidence was better than the retailer had anticipated due to modest falls in unemployment, low inflation and continuing low interest rates. Next had forecast for like-for-like sales to be between flat and -3%. Some £7m of that profit can be attributed to the fact that Next will report a 53 week year this year.

Next added that it had entered its Sale with 12% less stock than last year and that clearance rates are in line with last year.

However Next warned that the first half of this year would not necessarily continue in the same vein, citing risks including the scale of the public sector deficit posing a threat to recovery. It also highlighted increased taxes and reduction in government spending as possible risks to consumer spending. It said that increases to indirect tax could fuel inflation which may in turn push up interest rates.

Next forecast that its retail like-for-like sales will be between 1% and -3% in 2010 but said it was well placed to face the challenges that may arise this year and believes it can deliver similar levels of profit to the current year.

 

Readers' comments (1)

  • Next is the master of managing expectations but this is a solid result and their ranges have been looking stronger. Simon Wolfson said he would continue to source more product in Europe allowing him to get new product in to stores faster. I am guessing that their like-for-likes for 2010 will turn out to be at the top end of their forecasts.

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