Next celebrates trading results

High street retailer Next had plenty to celebrate about as it’s total sales for the 22 week period from 26 July to 24 December 2009 were up 4.6 per cent. Like for like sales rose 3.2 per cent and Directory sales grew 6.8 per cent. Sales in the run up to Christmas were better than expected and were markedly stronger in the final two weeks as the weather turned colder. Next stated it believed that two factors contributed to sales finishing ahead of its November guidance.
Firstly, the consumer environment was more stable than expected, with only modest falls in employment, low inflation and continuing low interest rates. Secondly, its ranges improved across the board the company expanded their efforts to more aggressively back new products and trends.

Next stated it went into the End of Season Sale with 12 per cent less stock than last year across Retail and Directory. In addition to beating sales targets Next tightly controlled stock levels and costs across the Group. As a result, Next now estimate that Group profits for the year to 31 January 2010 will be between £490m and £500m. This is ahead of the guidance given in November and includes approximately £7m of additional profit resulting from this year being a 53 week year; next year will revert to 52 weeks. Earnings per share at profit of £490m would be 180p, this would be an all time high for the Group and 15 per cent up on last year.

Consumers are generally in a much better position than they were a year ago, the company said in its trading statement. Low interest rates have enabled those in employment to service their debts and increase their savings – in November and December Next saw a marked decline year on year in the number of our customers falling into arrears. The increase in unemployment has been lower than expected, as labour flexibility in the private sector has allowed employers to preserve more jobs than many thought possible. Crucially, the fall in employment has been much lower than the increase in unemployment, falling just 1.6 per cent (463,000) since December 2007.

Forecasting for 2010, Next said it was buying to a budget at the lower end and assuming that the addition of profitable new space will take total Retail sales to level with last year. The company is planning for Next Directory sales to grow by between 0 per cent and +2 per cent.

Image: Next SS10

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