NEXT raises profit outlook after better-than-expected festive trading

NEXT has hiked its profit outlook for the fifth time this year after better-than-expected festive sales and forecast earnings to increase further over the next 12 months.

The retail giant saw full-price sales jump 5.7% higher over the nine weeks to 30 December 2023, with growth of 10% in both of the final two weeks before Christmas Day.

It is now forecasting full-year sales to rise by 4% as January trading is also set to be better-than-expected.

NEXT upped its profit forecast to £905 million for the year to 27 January 2024, marking a 4% rise on 2022-23 and compares with guidance of £885 million given in November.

It is also predicting a 5% rise in underlying group pre-tax profits to £960 million for the year ahead on full-price sales up 2.5%, or 6% including recent acquisitions.

NEXT revealed it is not planning to increase prices for shoppers over the new financial year as it said its own input costs are set to be stable for the first time in three years.

The retailer cautioned over "some delays to stock deliveries" early this year from the Red Sea attacks on container ships and disruption to the all-important Suez Canal shipping route.

It said trading in the run-up to Christmas was better-than-expected across its stores and online, with sales up 0.6% and 9.1% respectively in the Christmas quarter.

"Online performed particularly well, which we believe was as a result of service improvements versus last year," it said.

The retailer also said consumers are set to be boosted in 2025 as wages finally outstrip inflation, which "will ease the pressure they have felt on their cost-of-living for the last eighteen months".

"On the face of it, the consumer environment looks more benign than it has for a number of years, albeit there are some significant uncertainties," it added.

It cautioned there may be more unemployment over the coming year while many homeowners still face higher mortgage rates as they come off fixed deals.