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| Next results signal a good Christmas for UK retailers | Next results signal a good Christmas for UK retailers |
| (25 days later) | |
| Next has raised hopes for the retail sector by revealing a better than expected Christmas, with strong online sales more than offsetting grim trading at its high street stores. | Next has raised hopes for the retail sector by revealing a better than expected Christmas, with strong online sales more than offsetting grim trading at its high street stores. |
| The clothing and home chain said overall sales rose 1.5% in the 54 days to 24 December in a trading statement that kicked off the festive reporting season. A fall of 0.3% had been forecast. | The clothing and home chain said overall sales rose 1.5% in the 54 days to 24 December in a trading statement that kicked off the festive reporting season. A fall of 0.3% had been forecast. |
| Next upgraded its profit expectations for the year to January by £8m, to £725m, after sales received a last-minute boost from the colder weather in the run-up to Christmas. | Next upgraded its profit expectations for the year to January by £8m, to £725m, after sales received a last-minute boost from the colder weather in the run-up to Christmas. |
| Simon Wolfson, the 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. | Simon Wolfson, the 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. |
| Shares in Next jumped almost 7%. Marks & Spencer, the Primark owner Associated British Foods, Sports Direct, Boohoo.com and JD Sports were also up on hopes that they may have fared better than expected too. | Shares in Next jumped almost 7%. Marks & Spencer, the Primark owner Associated British Foods, Sports Direct, Boohoo.com and JD Sports were also up on hopes that they may have fared better than expected too. |
| The Co-op also enjoyed a bumper Christmas, with sales up 6.2% at established stores in the two weeks to 1 January. The mutual had expected a strong festive season as its small shops were able to stay open longer than supermarkets on a Sunday, giving them an edge on Christmas Eve. | The Co-op also enjoyed a bumper Christmas, with sales up 6.2% at established stores in the two weeks to 1 January. The mutual had expected a strong festive season as its small shops were able to stay open longer than supermarkets on a Sunday, giving them an edge on Christmas Eve. |
| Lord Wolfson said Next’s trading was “not enough to say there has been a huge change in the consumer economy”. | Lord Wolfson said Next’s trading was “not enough to say there has been a huge change in the consumer economy”. |
| He said Next’s online Directory business picked up orders when snow kept shoppers away from stores, and that consumers were more confident about next-day delivery promises, which meant more online sales closer to Christmas. | He said Next’s online Directory business picked up orders when snow kept shoppers away from stores, and that consumers were more confident about next-day delivery promises, which meant more online sales closer to Christmas. |
| All of Next’s growth was online, where sales rose 13.6%. Its high street stores suffered a 6.1% slump. That pattern is expected to be repeated across the retail sector next week as companies including Marks & Spencer, Debenhams, John Lewis and House of Fraser report on the most important part of the trading year. | All of Next’s growth was online, where sales rose 13.6%. Its high street stores suffered a 6.1% slump. That pattern is expected to be repeated across the retail sector next week as companies including Marks & Spencer, Debenhams, John Lewis and House of Fraser report on the most important part of the trading year. |
| The number of in-store shoppers was down 2.3% between 27 and 30 December compared with the same period last year, according to monitoring service Springboard. Numbers dived 10.5% on New Year’s Eve as Storm Dylan kept shoppers at home. | The number of in-store shoppers was down 2.3% between 27 and 30 December compared with the same period last year, according to monitoring service Springboard. Numbers dived 10.5% on New Year’s Eve as Storm Dylan kept shoppers at home. |
| Retailers had been expected to suffer a tricky trading period after several reported poor autumn sales. Next shares dived in October when it warned of “extremely volatile” trading. | Retailers had been expected to suffer a tricky trading period after several reported poor autumn sales. Next shares dived in October when it warned of “extremely volatile” trading. |
| Alistair Davies, a retail analyst at Investec Securities, said there would be relief that trading at Next was better than expected. But he added: “We would caution against reading too much across to other retail stocks – the reality is that even though Next’s Christmas numbers are better than expected, the company has still had a tough Christmas.” | Alistair Davies, a retail analyst at Investec Securities, said there would be relief that trading at Next was better than expected. But he added: “We would caution against reading too much across to other retail stocks – the reality is that even though Next’s Christmas numbers are better than expected, the company has still had a tough Christmas.” |
| The company warned of a difficult year ahead in which profits were likely to fall. It said costs were expected to rise faster than sales, with shoppers being held back by declining real incomes and a preference for spending on restaurants, holidays and leisure than clothes. | The company warned of a difficult year ahead in which profits were likely to fall. It said costs were expected to rise faster than sales, with shoppers being held back by declining real incomes and a preference for spending on restaurants, holidays and leisure than clothes. |
| Wolfson said cost price inflation was easing and was likely to disappear in the second half of the year. Clothing price rises were expected to slow from 4% over the last year to 2% in the first half of 2018. | Wolfson said cost price inflation was easing and was likely to disappear in the second half of the year. Clothing price rises were expected to slow from 4% over the last year to 2% in the first half of 2018. |
| “The inflationary bubble that hit the UK economy as a result of the pound’s fall will come out of the numbers and we are hoping that will affect the wider economy as well.” | “The inflationary bubble that hit the UK economy as a result of the pound’s fall will come out of the numbers and we are hoping that will affect the wider economy as well.” |
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