Next has emerged as a winner from a tough Christmas trading period for Britain’s retailers after a cold November stoked demand for winter coats and knitwear.

The high street company reported full-price sales growth of 5.2% for the last two months of 2019, which was well ahead of its forecasts. The better than expected outcome meant Next nudged up its profit guidance for the year by £2m to £727m.

Under its longstanding chief executive, Simon Wolfson, Next has been one of the industry’s most resilient retailers. The strength of its home shopping arm, which sells other fashion brands as well as its own, helped offset falling sales in its high street chain. The same was true this Christmas, with in-store sales falling 3.9%, while online sales jumped 15.3%.

Wolfson said a chilly November, compared with mild conditions in 2018, helped the retailer to beat internal sales budgets by £9m – although the number of shoppers visiting its stores on Boxing Day had been “disappointing”. Holiday spending behaviour was little changed from the rest of the year, he added.

“There isn’t a special Christmas consumer confidence versus the rest of the year confidence,” Wolfson explained. “The underlying consumer environment was very similar to what it has been for the rest of the year.” There was “no evidence” that the election had affected trading, he said.

Next is the first major retailer to reveal its performance over the all-important Christmas trading period. The run-up to the holiday was characterised by heavy discounting by rivals, starting with the Black Friday extravaganza at the end of November. The weekly updates provided by the department store chain John Lewis point to a huge spike in trade around Black Friday followed by several disappointing weeks in December.

Wolfson said his feeling was that Black Friday “was less of a thing” than in 2018. “People have forgotten how big it was last year and the year before that,” he said. Next said the amount of stock in its own Black Friday promotion was 20% down on the previous year.

“Our sense is that there was less Black Friday discounting than last year but that is very anecdotal,” he continued. “The disappointment in retail [its stores] was very much one day and that was Boxing Day and I think that was more to do with the rain than anything.”

Richard Lim, the chief executive of the consultancy firm Retail Economics, said Next was reaping the benefit from years of investment in its web operation that had come into its own as shopping habits changed.

“This was an impressive end to the year as their outstanding online business continues to set them apart from the competition,” he said. “There’s no doubt that more Christmas shopping was done online this year than ever before. 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.”

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Published On : 03-01-2020

Source : The Guardian