UK

Next Raises Profits Forecast After Bumper Christmas Trading

03/01/2014 09:53 GMT | Updated 23/01/2014 15:52 GMT
Paul Faith/PA Archive
File photo dated 29/12/2008 of a branch of High street fashion chain Next which upped its annual profits forecast for the third time in five months today as it thanked better ranges and a welcome improvement in consumer confidence.

Fashion chain Next joined the list of Christmas retail winners as it said sales over the festive season had been "significantly" better than expected.

The group hiked its profits forecast for the second time in just over two months after the robust performance, with pre-tax profits for the year to January 25 now expected to surge by up to 12.6%.

Sales across its stores leapt 7.7% higher between November 1 and Christmas Eve, while it said revenues surged by 21% in the Next Directory catalogue and online division.

Next's bumper trading update comes as department stores John Lewis and House of Fraser enjoyed soaring sales over the Christmas trading period, while rival Debenhams was forced to issue a shock profits warning.

Next offered cheer for investors as it said it would pay out £75 million in special dividends worth 50p a share and return a further £300 million to shareholders over the year ahead following its bumper year so far.

It now expects to earn between £684 million and £700 million in its full year, up from a previous range of between £650 million and £680 million.

Next put its strong Christmas performance down to better ranges of knitwear, nightwear and gifts, as well as an increased confidence in online deliveries seeing shoppers buy over the internet right up until the weekend before Christmas.

It said: "It seems likely that the economy will continue to steadily improve with strong employment numbers driving a general recovery. However, the problem of little or no growth in real earnings looks set to persist for some time.

"We are also wary that any return to significant economic growth is likely to result in rising interest rates which, in turn, is likely to moderate spending of those with mortgages."

Next, which currently has around 500 stores, plans to expand its retail space by 4% on a net basis over 2014, while also growing its online offering in the UK and overseas. It plans to launch a site in China this year.