Jan 3, 2020
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Upbeat Next ends tough year ahead of its peers, cool weather helps

Jan 3, 2020

In a retail sector that seems to offer up endless bad news, it was encouraging to see Next issuing a reasonably strong trading update on Friday and clearly coming out ahead of many of its more troubled retail peers.

Next had a good autumn/winter and Christmas season

The period from October 27 to December 28 saw full-price sales that were better than the company had expected with the total up 5.2%. But it was clear that factors outside of any business’s control played a part, as well its own actions. Next said it thinks the performance was helped by “a much colder November than last year” as well as “improved stock availability in both its Retail stores and Online”.

The figures divided down into a 3.9% sales fall in the company’s Retail unit and a 15.3% increase in its Online division. That latter rise is important as e-sales now represent the biggest percentage of the company’s total. It also said full-price product sales in the Christmas period (that is, sales with its finance operation factored out) were up 5.3%.

The company added that stock in its end-of-season sale (including the stock it put into its Black Friday event) was down 2.9% on last year and clearance rates to date have been slightly lower than its expectations.

Looking at a wider period, Next said that its full-price sales in Q4 rose 5.2%, which was a full 1.1% ahead of its own forecasts. And in the financial year so far, full-price sales including its finance ops are up 3.9% year-on-year. And full-price product sales are up 3.6% over the year as a whole. That has divided into physical shop sales falling 4.6% and e-sales rising 12.1% in the year to December.

The result of this is that the firm has increased its annual pre-tax profit guidance by £2 million to £727 million. This means profit is expected to be up on last year, but only by 0.6%.

And for the year ending January 2021, the retailer expects full-price sales to rise 3% with its profit rising 1% on a comparable 52-week basis (the year ahead is actually a 53-week one). This is an impressive result in a sector that's under heavy pressure and suggests that a well run company that's balancing its physical shops with its online operations can still come out ahead.

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