Next celebrates Christmas sales – but remains cautious for year ahead
Enderby retail giant Next has enjoyed a stellar Christmas period, it reported this morning (Jabuary 5).
Sales at the firm were up 4.8% on 2021 festive figures – and more than £66m. Next has upgraded its full-year profit guidance by £20m to £860m.
Despite this, Next says it “remains cautious” for the year ahead. Initial guidance for the year ending January 2024 is for full price sales to be down 1.5% and profit before tax to be £795m, down 7.6% versus the current year.
A statement from Next said: “Both online and retail exceeded our full price sales expectations, with retail being particularly strong. We think that we underestimated the negative effect Covid was having on our retail sales last year. We may have also underestimated the effect improved stock levels would have on both businesses (stock levels were exceptionally low last year as a result of widespread supply chain disruption).
“Forecasting for the year ahead at this early stage comes with a high level of uncertainty. We have assumed that full price sales for the year ending January 2024 will be down 1.5% against the current year. Underlying product sales are expected to be down 2.2%. Interest income, from our consumer Finance business, is expected to contribute 0.7% growth to sales. This is mainly as a result of consumer balances continuing their return to pre-pandemic levels.”
Richard Lim, CEO, Retail Economics said: “These results are all the more impressive given the harsh squeeze on household finances. Store sales were particularly strong with shoppers opting to head back into physical locations to seek out the best deals and keep a tighter grip on their budgets.
“Costly online deliveries, being charged for returns and the uncertainty of whether online orders would be received in time because of strike action played into the hands of omnichannel retailers. Next’s best-in-class proposition was well-positioned to benefit from this disruption as they leveraged the value across their joined-up physical and digital platforms, providing an array of options for customers.
“However, the outlook remains tough. The combination of rising mortgage costs, spiralling energy bills and ongoing inflation across staples will hit discretionary spending throughout 2023. This recessionary backdrop set against rising operating and input costs for retailers is going to hit profits hard for large swathes of the industry.”
