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Next Pre-Christmas Sales Help Lift Profits Prediction

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NEXT PRE CHRISTMAS SALES
Next continued to defy the gloom in the run up to Christmas reporting a 3.9% sales rise | Alamy

Next's pre-Christmas sales, excluding VAT sales tax, rose 3.9%, prompting the clothes retailer to increase its profits forecast for its year end at the end of January.

Released in a statement on Thursday, Next said it expected a year to end-January 2013 pre-tax profit of £611 million - £625m, up from its previous estimate £590m-£620m.

The increase in profits was down to improved cost control measures, markdowns and gross margins being "slightly better than expected".

"We think it is unlikely there will be any dramatic change in the consumer environment in the year ahead. Healthy employment numbers mean that there is little risk of a significant downturn," said the statement.

"However, the continued growth in price inflation ahead of wage inflation means that real wages will continue to fall, albeit at a slower rate than last year. On balance, we expect the consumer environment to remain subdued but steady."

Next's online business continued to do well, it also defied the gloom to produce slightly positive results in stores.

Sales at Next's 500 stores in the UK and Ireland rose 0.8% in the November, December period while sales at the Directory online home shopping business increased 11.2%.

Nick Hood, business analyst from Company Watch, told Huff Post UK: "Next's Christmas trading reflect the puzzle facing so many retail chains, as online business surges but store sales fall. The jury is still out on the best way to reshape the sector's business model as shops turn into little more than showrooms and profits get squeezed by the cost of overweight store portfolios and lower online margins.

"Like at John Lewis, Santa left plenty of presents under the tree for Next. Our financial health rating of 68 out of a possible 100 confirms it has more than adequate resources to stay one of the retail winners in a tough market."

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Filed by Charlie Thomas
 
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