Next: “Impressive” performance could be a shot in the arm for beleagured High Street

Next has hiked its full-year profit guidance after seeing better than expected sales over the Christmas shopping period.

The high street staple lifted its pre-tax profit guidance by £20m to £860m, in an update for the nine weeks to 30 December.

Sales of full-price items were 4.8 per cent higher than last year, although bosses warned sales for the year ending January 2024 would still be down 1.5 per cent against the current year. 

The London-listed titan said that it had underestimated the hit from the Covid-19 pandemic on its retail sales last year, when many shoppers were still swerving the high street due to virus fears.

Bosses admitted they may have also underestimated the impact of improved stock levels on trade at both online and physical stores. Like many of its high street neighbours, Next was hammered by “exceptionally low” stock levels due to supply chain disruption last year.

Next warned that underlying product sales were anticipated to dip 2.2 per cent over the year ahead.

Its initial guidance placed profit before tax to be £795m for the year ending January 2024, down 7.6 per cent versus the current year.

While bosses acknowledged this forecast may be seen as “overly cautious in the context of our performance in the second half of this year,” they pointed to dwindling consumer confidence.

Charlie Huggins, Head of Equities at Wealth Club, commented: “This is another impressive performance from the bellwether of the UK High Street, reinforcing Next’s reputation as one of the best run UK retailers.

Demand for clothing would be dampened by eye-watering prices of essential goods, especially energy, rising mortgage costs as consumers’ fixed interest rate deals expire, and Next’s own price hikes. 

The retailer said inflation in its like-for-like selling prices would be around eight per cent in the spring/summer of 2023/24 and six per cent in the autumn/winter period.

Chief executive Lord Wolfson warned in August that shoppers were likely to spend less in the second half of the year because of rising prices. 

Earlier this year, Next snapped up troubled fashion chain Joules for £34 million in December, after it teetered on a collapse into administration.

Next also bought the brand, websites and intellectual property of furniture business Made.com.