Next raises profit guidance as its online channel continues to drive growth, says GlobalData

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Following today’s release of Next Christmas trading figures for FY2019/20, Emily Salter, retail analyst at GlobalData, a leading data and analytics company, comments: ‘‘UK retail bellwether Next has reported strong revenue growth over the key Christmas trading period after a weak Q3, with full price sales 1.1% (£9m) higher than its internal forecast. Although this year’s sales were up against a dire November 2018 for retail, Next has been able to generate significant growth through evolving its proposition, in particular online.

“After a more positive than expected Q4, the retailer has raised its full year profit guidance by £2m to £727m as it now expects full year sales growth of 3.9%, 0.3 ppts higher than previous expectations. That Next has managed to drive higher than expected growth in a year characterised by high levels of economic uncertainty is impressive and as retailers report on their Christmas performance over the next few weeks, it is unlikely that others will have fared as well.

“The high street stalwart reported that stock in its end-of-season Sale, including during the Black Friday period, was 2.9% lower than last year and markdown sell through rates are slightly lower than expected. As many retailers discounted frequently and heavily in 2019, consumers may have hit sale fatigue, making end-of-season sales less appealing. This trend mirrors that seen at John Lewis & Partners, which reported a slower than usual start to its Clearance promotions earlier this week.

“The decline in sales generated by Next’s stores slowed significantly versus last year, as the retailer cited improved availability, and will have been aided by stronger footfall to retail parks, as its presence in this location will have shielded it from the sharper decline in footfall to town centres. Ongoing improvements to its in-store proposition focusing on leisure and service aspects, such as Costa Coffee and Amazon Counter, will have been popular in the lead-up to Christmas, driving footfall to stores. Next needs to feature bestselling lines relevant to the local customer base to ensure the more limited ranges in-store (versus online) are the most worthwhile lines to stock, highlighting key ranges such as its Emma Willis collection.”