Next increases targets as shoppers shrug off cost-of-living concerns

High street giant Next has upgraded its profit guidance again amid optimism ahead of the key Christmas period, shrugging off concerns over pressures on shoppers’ finances.

Shares in the company, which runs around 900 stores, jumped on Wednesday morning as a result.

The company, which is widely seen as a bellwether for the UK high street, said sales over the festive quarter are set to be significantly higher than previously predicted.

Next said it expects full price sales to grow by around 7% in the quarter to January, increasing its guidance from 4.5%.

Nevertheless, this will represent a slight slowdown on the previous quarter, with the retailer also predicting that UK sales growth will ease back marginally.

It came as Next reported that total full price sales grew by 10.5% over the 13 weeks to October 25, compared with the same period a year earlier.

In the UK, sales were up 5.4% over the quarter, with a 7.8% online increase partly offset by a 2% increase across its shops, surpassing its expectations amid recent warnings over the consumer backdrop.

Meanwhile, overseas sales shot 38.8% higher for the quarter.

Next told investors it expects to deliver a pre-tax profit of around £1.135 billion for the year to January, as it hiked its guidance by around £30 million.

This is the latest profit upgrade from the business, after it also raised expectations in July.

Julie Palmer, partner at Begbies Traynor, said: “Next has once again proven why it’s the gold standard in UK retail.

“With guidance lifted and healthy sales growth both at home and abroad, the retail giant’s winning formula of tight cost control, effective stock management and a well-balanced online and store offer is clearly paying off.

“At a time when many retailers are feeling the squeeze from rising costs, weak consumer confidence and uncertainty around the next Budget, Next appears largely immune to such pressures.”