Next wins festive sales war

Next joined UK retailers John Lewis and House of Fraser in the battle for festive business.

The UK’s second-largest clothing retailer raised its full-year profit forecast after sales significantly exceeded company expectations, sending the shares up as much as 11%. Like John Lewis and House of Fraser, which yesterday reported stronger holiday sales, Next growth was driven by its online business, while it also avoided the pre-Christmas discounting that led competitor Debenhams to forecast a profit slide.

“Retailers that have been absolutely consistent and aren’t chopping and changing their strategy, like Next and John Lewis, are winning hands down,” said Bryan Roberts, an analyst at Kantar Retail in London.

“Next shoppers know there are no pre-Christmas sales, whereas customers have punished Debenhams for its somewhat random sales. Nothing infuriates people more than seeing your item on sale the day after you paid full price.”

The gap between UK retail’s winners and losers widened this Christmas, with those that maintained pricing discipline and made it simple for shoppers to collect online orders from their stores coming out on top.

Next, the owner of the UK’s biggest home-shopping business, stuck to its policy of waiting until Dec 26 to start its clearance sale, while the likes of Debenhams chased sales with price cuts, eroding profitability.

Discounting before Christmas wasn’t an option for Next CEO Simon Wolfson said yesterday in a telephone interview. “Ultimately you are competing against your own numbers last year, so if you didn’t discount last year it’s easier not to discount this year.”

Like John Lewis and House of Fraser, Next also cited surging online orders as a reason for its successful holiday season. Sales at the Next Directory unit increased 21%, with more customers shopping up to the weekend before Christmas because of increased confidence in online deliveries, the retailer said.

Click-and-collect, where customers order online and pick up the purchase from their local store, was a particular area of growth. About 20% of Britons bought items online for in- store collection in the run-up to Christmas, according to a survey conducted by digital-products creator Foolproof Ltd.