Strong growth in online sales helped multichannel fashion retailer Next compensate for falling business in its stores in the run up to Christmas.
Total Next brand sales rose by 3.1% in the period from August 1 to December thanks to a 16.9% rise in Next Directory online sales. But sales in its stores were down by 2.7% over the same period, Next said in a trading statement today, adding: “The strong performance of Next Directory continued to compensate for slightly disappointing Next Retail store sales.”
The figures continue a trend that was already evident at the same time last year. Then the retailer’s total sales rose by 3.2%, on the back of a 16% rise in Directory sales but with store sales down by 2.2%.
The company, which said it expected full-year profits to be in line with previous guidance at “£7m either side of £565m” and at least 4% up on last year, said it would look to grow its Next Directory business online, both at home and overseas, as part of its aim to deliver sustainable long term growth. Other strategic aims including opening profitable new space, controlling costs and setting realistic sales budgets, while returning surplus cash to shareholders through share buybacks.
Next said it enjoyed a good final week before Christmas but was disappointed by sales in November and December. It put this down to factors including warm winter weather and higher levels of discounting at competitors.
Looking to the next financial year, the company said it expected inflation to ease in the second quarter of the year, once last January’s VAT increase goes past its first full year, and that its own selling prices would not increase. However, potential negatives included difficulties in the Eurozone, the continued credit squeeze on businesses and consumers, as well as growing unemployment. On balance it predicted “modest growth in overall Next brand sales with profit before tax only slightly up on this year.”