Blow-out Christmas sales for Next (NXT) but investors steer clear
09:48, 6 January 2022
Investors were little moved this morning by Next’s 20% sales rise on pre-pandemic Christmas sales and hiked pre-tax profit guidance of £22m to £822m.
Next (NXT) stocks fell 1% in early trading to 7,958.00p. Shares have seen a 8,482.00p high and a 7,214.00p low over the past 12 months.
Some of the unease was Next’s warning that 2022 would be “tough”. Next is worrying about rising consumer inflation pressures as well as its own costs, freight and manufacturing. It is pencilling in weaker growth for the upcoming quarter.
The fashion and homewares player reported £70m more sales than anticipated during the Christmas period thanks to more online orders and occasionwear. It also appears to have side-stepped some of the low stock and supply chain stresses which have plagued other retailers.
Growth hampered
“We were expecting sales growth in Q4 to be weaker than Q3, however, a strong revival in NEXT branded adult formal and occasionwear significantly improved sales throughout the final period,” the retailer reported earlier.
“In the run up to Christmas our stock levels were materially lower than planned,” it added. “We also experienced some degradation in delivery service levels as a result of labour shortfalls in warehousing and distribution networks.
“The fact that our sales remained so robust in these circumstances is, we believe, testament to the strength of underlying consumer demand in the period.”
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Sale stock lower
Its surplus stock was “much lower” than expected with its end-of-season Sale stock down 18% compared to two years ago. “The reduction in Sale stock was mainly the result of better than expected full price sales in the period.”
The high street chain paid a special 110p per share dividend worth £140m in September. “The Board has decided to return a further £205m to shareholders by way of a second special dividend of 160p per share.”
This will be paid on 28 January.
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