Fashion chain Next has posted a rise in sales over Christmas as the retailer upgraded its profit forecast and signalled that inflation pressures are set to ease.
The high street giant said full-price sales in the 54 days to December 24 increased 1.5%, ahead of expectations.
Part of the improvement, the company said, was down to much colder weather leading up to Christmas.
Next saw online sales jump 13.6% in the period, helping mitigate a 6.1% decline in high street sales.
Next boss Lord Simon Wolfson (PA)
As a result, Next has increased its full-year profit guidance by £8 million to £725 million, although the figure is still a long way off last year’s £790.2 million.
The trading update will come as a relief to the retailer, which has been hammered by rising costs linked to the Brexit-battered pound and the resultant collapse in consumer confidence.
“Many of the challenges we faced last year look set to continue into the year ahead.
“Subdued consumer demand driven by a decline in real income, the increase in experiential spending at the expense of clothing, and inflation in our cost prices remain challenges for 2018,” Next said.
Chief executive Lord Simon Wolfson – a prominent Leave campaigner – has already said that cautious consumers were only buying “as and when they need” as trading remains “extremely volatile”.
However, the firm added that it believes “some of these headwinds will ease” through 2018, with inflation falling to 2% in the first half and disappearing in the second.
The retailer expects total full-price sales this year to nudge up 0.3%, rising to 1% next year.
Next is the first in a long list of sector peers due to report on Christmas trading in the coming weeks, with experts predicting that some firms could have to issue profit warnings.
Among the bevy of firms reporting figures are AO World, Morrisons, Sainsbury’s, Ted Baker, Tesco, Marks & Spencer, John Lewis, Debenhams, ASOS and Dixons Carphone.
Recent data has done nothing to inspire confidence for retailers, with figures from Springboard showing footfall in the last trading week before Christmas fell by 7.1% year on year, while on Boxing Day it plummeted 5.9%.
Next shares rose more than 8% to 4,893p in morning trading as investors welcomed the update.
Shares in other retailers were also up, including Marks & Spencer, Debenhams, Ted Baker and Primark owner Associated British Foods.