Next shares surge on improved profit outlook after better-than-expected Christmas online sales

Clothes retailer Next has upped its profit outlook following better-than-expected online sales over the festive lockdown period.

Shares in fashion retailer Next jumped by more than 8% after it soundly beat its forecast for Christmas sales despite Covid-19 lockdowns closing stores in the UK and Ireland during November and the final shopping days of December, resulting in another upgrade to underlying profit guidance.

Next, which has seen increased demand for children’s clothes and leisurewear during the pandemic, said full-price sales fell 1.1% in the nine weeks to December 26 on last year, beating its central guidance of an 8% drop given in October.

Chief executive Simon Wolfson said its online operations had coped with a spike in demand as more than half of the sales that would have been made in-store in November migrated online.

“We were surprised that the business did as well as it did despite the November lockdown,” he said. “Our operations kept up with demand, which was something we were anxious about in October.”

The company has repeatedly upgraded forecasts since the start of the pandemic. 

In April it predicted a 35% drop in full-year sales and zero pre-tax profit, whereas now it sees a 16% drop in sales and underlying pre-tax profit of £370m (€411m).

Next has benefited from its long-established online operation, which recorded a 38% rise in full-price sales in the fourth quarter up until December 26.

Rivals with weaker or no online operation, notably Primark - which trades in Ireland as Penneys - have seen far larger drops in sales. Next’s latest upgrade is its fourth in five months.

-Reuters