BREAKING NEWS

BREAKING NEWS

UK's Next confounds fears of dire Christmas with sales rise

UK's Next confounds fears of dire Christmas with sales rise
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HENRY NICHOLLS(Reuters)
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LONDON (Reuters) - British clothing retailer Next reported a rise in sales in the run-up to Christmas in line with its own expectations, boosted by online demand and confounding fears of poor festive trading.

Next, the first major listed retailer to update on Christmas trading, said on Thursday that strong sales in the three weeks prior to Christmas along with a good half-term holiday week at the end of October made up for disappointing sales in November.

It said that for the year ahead (2019-20) it was assuming a similar economic environment as that experienced in the second half of its current year. But it cautioned that forecasts for 2019-20 come with a high degree of uncertainty due to Brexit.

Next said total full price sales including interest income rose 1.5 percent in the period from Oct. 28 to Dec. 29, the bulk of its fourth quarter. That outcome compared to third quarter growth of 2.0 percent.

The trading environment in Britain in the run-up to Christmas was brutal with many retailers having to cut prices to shift stock.

Industry data showed the largest November drop in shopper numbers for a decade and a huge profit warning from online fashion retailer ASOS on Dec. 17 routed share prices across the sector, suggesting the high street malaise had spread to online players too.

British retailers are facing a perfect storm of rising costs, Brexit-induced UK consumer weakness and the structural shift online. Clothing retailers have also suffered from unseasonably mild autumn and winter weather.

Next, which trades from more than 500 stores in Britain and Ireland, about 200 stores in 40 countries overseas and its "Directory" online and catalogue business, has a longstanding policy of not going on sale before Boxing Day (Dec. 26).

Sales at its stores fell 9.2 percent but Directory sales were up 15.2 percent.

For the full 2018-19 year Next is forecasting full-price sales growth of 3.2 percent and pretax profit of 723 million pounds versus 726.1 million pounds made in 2017-18. It was previously forecasting sales growth of 3 percent and profit of 727 million pounds.

For 2019-20 it is forecasting full-price sales growth of 1.7 percent.

Shares in Next, which prior to Thursday's update had fallen by 24 percent over the three months, closed Wednesday at 4,177 pence, valuing the business at 5.9 billion pounds.

(Reporting by James Davey; editing by Kate Holton)

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