NEXT has delivered some much-needed cheer to the UK’s embattled high street after festive sales defied expectations of bleak Christmas trading. But its update again put the structural market change facing retailers into stark relief, as full-price sales in Next stores plunged while online trading surged.
Sector watchers have been expecting grim tidings from retailers on festive trading after a miserable 2018, which saw a raft of big-names go out of business with the loss of thousands of jobs. November saw the biggest drop in high street footfall for a decade.
John Lewis gave the first glimpse of Christmas trading on Wednesday when it said last-minute shopping helped sales to rise by 4.5 per cent in the week to December 29.
That was followed yesterday by Next, which saw its share price by four per cent as the retail bellwether reported a 1.5% rise in total full-price sales, including interest income, for the period between October 28 and December 29 – in line with guidance.
Shares in Primark owner Associated British Foods and Marks & Spencer both edged up as the positive tone was felt across the clothing retail sector.
Next said full-price sales in stores plummeted by 9.2 per cent, 1.7% or £16 million below expectations, which was offset by online sales growth of 15.2%, 2.2% or £17m ahead of forecasts.
Next, which was the first of the UK’s major listed retailers to report after Christmas, has revised its profit guidance for the full year down 0.6% to £723 million.
The retailers is guiding on full-price sales growth of 1.7% next year, but warned that Brexit means that forecasting dales in January “comes with a high degree of uncertainty”.
Laith Khalaf at Hargreaves Lansdown said: “Next has delivered some Christmas cheer to the retail sector, but only because its online offering is doing so well.
“Numbers from the high street stores look pretty dire, and tellingly Next expects sliding sales to continue for the next year.”
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