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Next PLC

UPDATE - Next shares hit record high as Britain goes mad for Christmas jumpers

Clothing retailer Next followed in the footsteps of John Lewis and House of Fraser by revealing bumper festive sales “significantly ahead of our expectations”

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Clothing retailer Next (LON:NXT) followed in the footsteps of John Lewis and House of Fraser by revealing bumper festive sales “significantly ahead of our expectations”.

The High Street stalwart also proved Debenhams’ poor sales, which prompted a profit warning on Tuesday, were a problem of its own making as it raised its full-year profit guidance.

A strong fourth quarter means the retailer now predicts profit of between £684mln and £700mln for the 12 months to January 25.

The bottom end of this new guidance would represent 10% growth, while the upper end would imply a 12.6% increase.

Store sales were up 7.7% from November 1 to December 24, while Directory sales – items ordered online and using the catalogue – jumped 21% in the same period, meaning an overall rise of 11.9%.

Next put the strong performance in the crucial Christmas shopping period down to the popularity of its Christmas jumpers and nightwear.

It warned that this trend may not continue into the first half of the new financial year and said it could be difficult to match the sales in the same period finishing January 2015, especially since it predicts no pick-up in consumer spending this year.

It has also decided to pay a special dividend of 50p a share on February 3 to shareholders on the books by January 17 given low interest rates.

Next said it expects to returns another £300mln of surplus cash to investors either through more quarterly special dividends or buybacks, depending on the share price.

Oriel Securities described it as a master class in how to profit from a changing retail environment.

“By delivering product that customers already see as good value, Next has successfully adopted a full price stance that has delivered Next brand sales growth of 11.9% well ahead of consensus expectations of 3.8%,” the broker said.

It raised its profit forecast by 4% to £690mln this year and £750mln for next year.

“The pick of the retail sector, buy to 6200p,” it concluded.

The shares jumped almost 10% to all-time highs of 6,074p on Friday.

Quick facts: Next PLC

Price: £60.23

Market: LSE
Market Cap: £79.63 m
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