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You can find the current article at its original source at https://www.theguardian.com/business/2018/jan/03/next-results-signal-a-bumper-christmas-for-uk-retailers
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| Next results signal a good Christmas for UK retailers | Next results signal a good Christmas for UK retailers |
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| Next has raised hopes for the retail sector by revealing a better than expected Christmas, with strong online sales offsetting a fall at its high street stores. | Next has raised hopes for the retail sector by revealing a better than expected Christmas, with strong online sales offsetting a fall at its high street stores. |
| In a trading statement, the clothing and home chain said sales rose 1.5% in the 54 days to 24 December. A fall of 0.3% had been forecast. | In a trading statement, the clothing and home chain said sales rose 1.5% in the 54 days to 24 December. A fall of 0.3% had been forecast. |
| Shares in Next, the first major retailer to report on festive trading, jumped almost 10% in early trading. Marks & Spencer and Primark-owner Associated British Foods were also up, rising about 3%, on hopes that they may also have fared better than expected. | Shares in Next, the first major retailer to report on festive trading, jumped almost 10% in early trading. Marks & Spencer and Primark-owner Associated British Foods were also up, rising about 3%, on hopes that they may also have fared better than expected. |
| Next upgraded its profit expectations for the year to January by £8m, to £725m, after sales benefited from the colder weather in the run-up to Christmas. Profit guidance is now between £718m and £732m and performance will depend on the clearance sales in January. | |
| Lord Simon Wolfson, chief executive of Next, said many shoppers had picked up cold weather gear for the first time in several seasons as snow and ice hit large parts of the country. “It’s really the first cold winter we have had for about three years,” he said. | |
| But he added that trading was only slightly better than expected and the outperformance of the business was “not enough to say there has been a huge change in the consumer economy.” | |
| Wolfson said Next’s online Directory business had picked up orders when snow limited access to high streets and retail parks. He added that shoppers were more comfortable with ordering for next-day delivery resulting in more online sales closer to Christmas. | |
| Next said all its growth came online, where sales rose 13.6%. The chain’s high street stores suffered a 6.1% slump. That pattern is expected to be repeated across the retail sector as companies including Marks & Spencer, Debenhams, John Lewis and House of Fraser next week reveal how they fared over the most important part of the trading year. | Next said all its growth came online, where sales rose 13.6%. The chain’s high street stores suffered a 6.1% slump. That pattern is expected to be repeated across the retail sector as companies including Marks & Spencer, Debenhams, John Lewis and House of Fraser next week reveal how they fared over the most important part of the trading year. |
| Retailers were expected to have suffered a tricky trading period after several reported poor autumn sales. Next shares dived in October after it warned of “extremely volatile” trading, with shop sales falling. | Retailers were expected to have suffered a tricky trading period after several reported poor autumn sales. Next shares dived in October after it warned of “extremely volatile” trading, with shop sales falling. |
| Despite Next’s better than expected Christmas, the company warned of a difficult year ahead in which profits were likely to fall. It said costs were likely to rise by about 2% in the first half of the year while sales would rise by 1%. | Despite Next’s better than expected Christmas, the company warned of a difficult year ahead in which profits were likely to fall. It said costs were likely to rise by about 2% in the first half of the year while sales would rise by 1%. |
| “Many of the challenges we faced last year look set to continue into the year ahead. 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,” the company said in a statement. | “Many of the challenges we faced last year look set to continue into the year ahead. 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,” the company said in a statement. |
| But Next said cost price inflation was easing and was likely to disappear in the second half of the year. Price rises are expected to slow from 4% over the last year to 2%. | |
| “The inflationary bubble that hit the UK economy as a result of the pound’s fall will come out of the our numbers and we are hoping that will affect the wider economy as well,” Wolfson said. | |
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