Next sees festive sales rise, but cuts profit forecast

Fashion chain Next has cut its annual profit forecast and predicted falling earnings over the year ahead despite revealing a solid Christmas performance.

The group said full-price sales rose 1.5% between October 28 and December 29, in line with expectations.

It saw high street store sales slump 9.2% over the Christmas trading period, though this was offset by a 15.2% surge online.

But it downgraded its profit forecast to £723 million for the year to January, from the £727 million previously expected, and said the next financial year will remain under pressure.

  • High street - down 9.2%

  • Online - up 15.2%

It blamed the gloomier profit outlook for the current year on higher sales of seasonal products, such as personalised gifts and beauty products, which have a lower profit margin than its clothing ranges.

The group also said it faced higher operational costs on online sales.

For the year to January 2020, Next predicted profits will fall 1% to £715 million while full-price sales growth will ease back to 1.7% from the 3.2% expected for 2018-19.

The group said: “In the year ahead, we are assuming a similar economic environment as that experienced in the second half of the current year.

“Within this guidance, we expect retail sales to be down 8.5% and online sales to be up 11%.”

But it said this came with a “high degree of uncertainty” and does not factor in the “potential benefits of a smooth transition or the downsides of a disorderly Brexit”.