• Next has upped its FY2017/18 sales and profit expectations on the back of a better than expected Christmas sales performance.
  • Next brand full price sales were up 1.5% during the 54 days to 24 December.
  • This is an improvement on the retailer's November guidance of a 0.3% fall.
Next brand full price sales were up 1.5% during the 54 days to 24 December

Next brand full price sales were up 1.5% during the 54 days to 24 December

Shares in Next Plc were up 6.5% this morning (3 January) as the UK fashion retailer bumped up its FY2017/18 sales and profit expectations on the back of a better than expected Christmas sales performance, buoyed by a cold snap in the run-up to the holiday season.

Next brand full price sales were up 1.5% during the 54 days to 24 December, an improvement on the retailer's November guidance of a 0.3% fall.

Sales performance in both retail stores and online experienced an improvement, down 6.1% and up 13.6% respectively during the period. The company said part of this improvement has been down to much colder weather leading up to Christmas.

Meanwhile, stock for the end-of-season sale – including Black Friday offerings - was "well controlled", down 6% on last year. "Clearance rates are in line with our expectations and are consistent with the profit guidance we gave in November," the retailer said.

As a result of what it called "better than expected" full price sales, Next is marginally upgrading its profit guidance. Central guidance for group profit has increased by GBP8m to GBP725m and profit guidance range is now GBP718m to GBP732m. However, the company cautioned where it falls within this range will depend on its January sales.

Meanwhile, full price sales are now set to come through 0.3% higher than last year, a notable improvement on the retailer's previous view of -0.3%.

"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. However, we believe that some of these headwinds will ease as we move through the year; we already know that lost price inflation will reduce to 2% in the first half and believe it will disappear in the second half."

Sofie Willmott, senior retail analyst at GlobalData, notes the retailer's choice to participate in Black Friday for the first time in 2017 will have driven traffic online and footfall into stores, benefiting full price sales at a time when retailers were ferociously fighting for a share of shopper spend.

She adds: "Store performance remains disappointing against weak comparatives, leaving the online channel to prop up total sales but participating in the Black Friday event will have given shoppers a reason to visit Next stores over mid-market rival Marks & Spencer, who did not partake in the occasion."

While Next remains cautious for the year ahead, aware that consumers' budgets will remain restricted, Willmott says FY2017/18 with full price sales in positive territory will give the retailer the confidence to compete in what will continue to be a highly competitive retail landscape.