Next achieved a £70m uplift in its sales for the 8 weeks to December 25th and is now expected to achieve a profit of £822 million for the full year which ends later this month.
Demand was particularly high for party dresses and suits as consumers planned a more social festive period than had been possible in 2020. This and an 85 per cent uplift in full-price online sales at its Label business which stocks third party brands combined with a 30 per cent rise in the online sales of Next’s own brand merchandise for the three months to 25 December more than offset the fall in-store sales of 5.4 per cent as compared with the same quarter in 2019. Materially lower levels of stock – at both Next and in the wider market – failed to dent performance and may possibly have worked in Next’s favour in segments that now have fewer competitors and, as a result, a lot less discounting.
In a statement, the company said: “The fact that our sales remained so robust in these circumstances is, we believe, testament to the strength of underlying consumer demand in the period. Lod Wolfson made the point that the surge in sales of suits, in particular, was a measure of how little has been bought of those products over the last two years. He also confirmed that many of the businesses that were discounting heavily two years ago are not trading now and that too would have helped Next store sales.
Whether the increase in other sector businesses spinning off their own third party supplied marketplaces, as per Label, will significantly impact Next has yet to be seen. Currently, though it is definitely in pole position to attract high profile brands and retain them on an exclusive basis.
Looking ahead, Next warned that problems in maintaining staffing levels in delivery and logistics functions due to the pandemic, a general labour shortage, as well as increased freight costs would continue. The rise in the living wage was yet another concern that would inevitably lead to higher prices in its stores. It suggested that its prices would increase by close to 4 per cent this spring and summer, with autumn ranges 6 per cent higher because of increased freight and manufacturing costs.
Lord Wolfson said; “The key level of uncertainty is the inflationary environment. I have been in business for 30 years and I don’t think I have ever been through another period of economy-wide inflation on this scale. How well we fare in that environment is difficult to see.”
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