Sales soar for Next - what's it doing right?

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Next trading update

Two big Christmas high street winners so far - John Lewis and Next. Retail sales for Next, announced this morning, leapt 12% compared to last year for the period 1 November to 24 December.

Next has also hoisted its pre-tax profit expectations to £700m for the year and its share price has hit an all-time high (£60), up 53% in 12 months. What's the Next secret?

Next up

It's well diversified for a start. The fashion retailer has invested heavily in multi-channel platforms and its Next Directory online and mail order business has consistently out-performed, in both sales and profits. Usefully, its online business acts as a hedge against bad weather on the high street.

Next has extended into homewares, a sector likely to improve as the housing market recovers. So much, then, for a secret formula. Rather, the Next emphasis is working the magic troika of bricks-and-mortar stores, online and mail order all competently and, crucially, ahead of rivals. Loyalty and trust have consequently followed.

In contrast, Debenhams announced a recent profits jolt and a once blue blood of the high street, M&S, had to resort to slashing 30% of all clothes in one crucial pre-Christmas trading day to encourage footfall.

Recovery mode

M&S will supply a trading update next Thursday - more pressure on its chief exec, Marc Bolland. In contrast, 46-year-old Next boss Simon Wolfson can feel much more confident (Wolfson is one of the few businessmen credited to have predicted the 2007-2008 economic crisis).

Wolfson says the UK won't see a proper UK economic recovery until consumers stop feeling hard-up. While UK inflation has soared in recent years - particularly food, energy and travel costs, witness rail fares climbing at three times the rate of wages for many - take-home pay remains depressed for huge swathes of working people.

"It is a mistake to believe we are in the recovery now," the Guardian quoted Wolfson in September last year. It's unlikely, despite the strong numbers this morning, he's changed his mind.