Next gets surprise Christmas gift as online sales boost profit hopes

Next results signal a good Christmas for UK retailers

George Salmon, equity analyst at Hargreaves Lansdown, explained that while colder weather may have boosted sales in the run-up to Christmas, the real positive was the more optimistic outlook from Next's chief executive Simon Wolfson.

While Next remains cautious for the year ahead, aware that consumers' budgets will remain restricted, Willmott says FY2017/18 with full price sales in positive territory will give the retailer the confidence to compete in what will continue to be a highly competitive retail landscape.

Shares in Next jumped nearly 7%.

Next has enjoyed an unexpected rise in sales over the Christmas period.

He said Next's online Directory business picked up orders when snow kept shoppers away from stores, and that consumers were more confident about next-day delivery promises, which meant more online sales closer to Christmas.

AJ Bell's Russ Mould also noted that trading at the company's High Street stores remained tough but said Next shrugged this off by demonstrating "the power of its online operations".

Inflation hit a multiyear year high of above 3 per cent at the tail end of 2017, and wage growth has been stagnant which has weighed on consumers' appetite for spending - especially on non-essential items.

Next was the first retailer to report the results of its Christmas trading, with a host of others following throughout January, including Morrisons, Sainsbury's, Ted Baker, Tesco, Marks and Spencer, John Lewis and Debenhams next week.

The number of in-store shoppers was down 2.3% between 27 and 30 December compared with the same period past year, according to monitoring service Springboard. Next shares dived in October when it warned of "extremely volatile" trading.

Alistair Davies, a retail analyst at Investec Securities, said there would be relief that trading at Next was better than expected.

High Street retailer Next performed better-than-expected over the Christmas period thanks to the UK's extended period of cold weather, the company said on Wednesday.

Where profit falls within this range will depend on Next's sales this month (January). That's lower than the current year because the operational costs are forecast to continue to grow faster than sales.

"We already know that cost price inflation will reduce to 2% in the first half and believe it will disappear in the second half".

"The inflationary bubble that hit the United Kingdom economy as a result of the pound's fall will come out of the numbers and we are hoping that will affect the wider economy as well".

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