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Retail chain Next has beaten sales expectations for the crucial Christmas period, in a sign that consumer spending may have been stronger than feared.
In the first Christmas trading update from a major retailer, Next reports that “sales in the Christmas period have been better than we anticipated”. Full-price sales over the nine weeks to 30 December were up by 4.8% on last year, Next says – around £66m better than its previous guidance of -2.0% for the period.
Cheered by this outcome, Next has lifted its guidance for full-year pre-tax profit by £20m to £860m, which would be 4.5% higher than last year. But, Next has also forecast lower profits for the 2023-24 financial year, citing uncertainty over the consumer outlook and cost inflation.
Next says that both online and retail exceeded its full price sales expectations, with retail being particularly strong, despite the squeeze on household incomes, adding: "We think we underestimated the negative effect Covid was having on our Retail sales last year."
Next also reports its end-of-season Sale is “progressing well”, revealing sales stock is 60% higher than last year – and 31% above pre-Covid levels.
Next has reinforce its reputation as one of the best-run UK retailers, by reporting an “impressive performance” in the Christmas period, says Charlie Huggins, head of equities at Wealth Club. "The group benefited from a cold snap in December, which has boosted demand for winter clothing, as well as the absence of pandemic restrictions ... Nevertheless, this shouldn’t take away from Next’s stellar execution. Many other retailers have struggled ... but Next’s proposition is clearly resonating with the UK consumer."
Shares in Next have jumped at the start of trading in London, as traders welcome its better-than-expected results. Next shares are up 6% to £64.50, the highest level since last August, making it the top FTSE riser. Fellow retailers JD Sports (+2.8%) and Frasers (+2.7%) are close behind.
British baker and fast-food chain Greggs is also reporting a jump in sales this morning. Greggs’ like-for-like sales grew by 18.2% in the last quarter of 2022, which lifted its total sales for 2022 to £1.5bn. Demand for Greggs’ seasonal lines was high, it says, such as its festive bake, a vegan alternative, sweet mince pies and festive hot drinks such as the salted caramel latte.
Plant-based foods are “contributing more significantly” to Greggs’ range, it says, citing new hot options such as a vegan festive baguette. Greggs also cautioned that it continues to see material cost inflation but says it’s confident of making good progress in 2023.
Discount retail chain B&M says it too had a strong Christmas, and announced a special dividend for shareholders. B&M has reported that its revenues grew by 12.3% year-on-year, in the 13 weeks to Christmas Eve. That included a “very good performance” across all its UK sales categories. B&M suggests that shoppers were seeking out value options amid the cost-of-living crisis. B&M sells a wide range of good at relatively low prices, such as furniture, toys, DIY products and gifts.
Also coming up today ... Members of the Aslef union at 15 rail companies will strike, in a long-running dispute over pay, meaning some areas will have no trains all day. The action follows a 48-hour strike by members of the Rail, Maritime and Transport union (RMT) which led to widespread disruption across the country yesterday.
The agenda
• 7am BST: Halifax survey of UK house prices
• 9.30am BST: Business insights and impact on the UK economy
We’ll be tracking all the main events throughout the day ... |
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