Next in line for bumper profits, John Lewis enjoys Christmas sparkle

High street clothing retailer Next is predicting its full-year profits will be at the top end of expectations thanks to a significant Christmas boost.

by Michael Northcott
Last Updated: 19 Aug 2013

The retailer said that total sales from 1st November to Christmas Eve were up by 3.9% compared with the previous year, whilst online sales rose 11.2% in the same period. It now expects profits for 2012 to come in at somewhere around £618m.

It’s good news for bosses at the chain, since earlier financial results in 2012 were disappointing. Back in September, the firm warned investors that the Olympics and Paralympics had hit sales hard because TV coverage of the games had kept millions of Brits at home over the weekend, instead of shopping for clothes. 

Year-on-year sales growth between August and September 2012 slowed to 3.25%, compared with 4.5% in 2011. Lucky for Next, it looks like the Olympic slump has been reversed to some extent. 

However, the chain warned that it does not expect a buoyant year in 2013. In its trading statement, it said: ‘We think it is unlikely there will be any dramatic change in the consumer environment in the year ahead’, but added, ‘healthy employment numbers mean that there is little risk of a significant downturn.’

Next’s results come just a day after John Lewis revealed it’s Christmas trading figures. The department store and supermarket chain reported a 13% rise in like-for-like sales in the five weeks to December 29 compared with the same period in 2011. Total sales were £684.8m in those five weeks.

The rise included record sales of £158m in the week running up to Christmas day, and marks the first time John Lewis has managed to break the £150m barrier for that week. Furthermore, the chain reported its highest ever sales for the first post-Christmas day of trading, December 27, when a total of £31.7m was logged in the cash registers.

Importantly, Street pointed out that the growth of online did not seem to make a dent in traditional shop-based sales. ‘It wasn’t internet at the expense of shops,’ he said, ‘it was both channels growing together.’

It is also worth noting that John Lewis benefited from a spike in demand for consumer electronics and appliances thanks to the demise of Comet at the end of 2012. The department store chain saw a 30.9% rise in sales of electrical and home technology.

Still, there is traditionally a drop-off in sales after the shopping frenzy of the festive season. Street said: ‘We are too wise to believe that the Christmas momentum just carries on. We have seen years in the past where things hit the brakes pretty quickly after Christmas.’

So the first two high street stalwarts have kicked-off the results season in a promising fashion. Let’s hope the retailers elsewhere on the high street enjoyed the same Christmas boost.

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