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Next’s sales beat its own expectations in the Christmas quarter

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Next today reported better than expected sales over the Christmas period, with online sales growing strongly while in-store retail sales declined relatively slowly.

The fashion and lifestyle multichannel retailer, ranked Leading in IRUK Top500 research, said that fourth quarter full-price sales – to December 28 – were up by 5.2% compared to the same time last year. Online sales were 15.3% ahead between October 27 and December 28, and 12.1% ahead in the year to December 28. In-store retail sales declined by 3.9% in the fourth quarter, and by 4.6% over the year. That fits with the trend suggested by recent footfall and online sales figures for shoppers to buy more online while visiting stores less often.

That’s 1.1% – or £9m – ahead of internal forecasts – and the retailer has now raised its expectations on full-year profits. “We believe our sales performance in the period was helped by a much colder November than last year and improved stock availability in both our retail stores and online,” it said in today’s trading statement

Full price sales in the year-to-date are 3.9% ahead of expectations following the strongest quarter of the retailer’s year. First quarter full-price sales were 4.5% ahead of the previous year, while the second quarter was 4% up, and third quarter 2% up. However, end-of-season sale clearance rates have been slightly lower than expectations. Stock in the sale – and in the Black Friday event – was down by 2.9% on last year. 

Next says it now expects full-year profits for the year to December 28 to come in at £727m, £2m more than previously expected, and an increase of 0.6% on last year. 

Its initial expectations for the year to January 2021 are for full-price sales up by 3%, with profits up by 1%.

Commenting on the figures, Richard Lim, chief executive of Retail Economics, said: “This was an impressive end to the year as their outstanding online business continues to set them apart from the competition. The retailer is benefitting from years of investment in their digital proposition, continually evolving their business model to meet shopper’s heightened expectations.

“There’s no doubt that more Christmas shopping was done online this year than ever before and they have positioned themselves to capitalise on the increasingly complex customer journey. Consumers expect to be able to seamlessly shop across a multitude of physical and digital channels, often at the same time, and the retailer has embraced this new reality.

“It’s also interesting to note that clearance sales were below expectations which are likely to have been disrupted from this year’s timing of Black Friday.”

Image courtesy of Next

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