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Fashion retailer Next expects its annual profits to be higher than predicted after a bumper festive sales performance, however it has warned there could be stock delays due to the Red Sea attacks.
Next, widely regarded as a high street bellwether, said it now believes full year profits will rise by £20m, or 4 per cent, after it secured a strong rise in full-price sales in the final nine weeks of last year.
This would take the retailer’s profits to £905m, a prospect that led its share price to surge by roughly 5 per cent to £84.97.
The growth excludes any increases from its recent acquisitions including fashion chain Reiss.
In spite of the upbeat numbers from Next, though, the retailer highlighted a weakening employment market as a potential risk to consumer spending, alongside fears about a rising number of low fixed rate mortgage deals coming to an end, forcing many homeowners to refinance at higher rates.
It also noted the current situation in the Suez Canal, where a rising number of ships are being attacked by Houthi rebels on the western coast of Yemen.
“Difficulties with access to the Suez Canal, if they continue, are likely to cause some delays to stock deliveries in the early part of the year.”
However, it highlighted a healthy rise in wages for many consumers – either in line with or above inflation – which could ease the recent cost of living pressures.
Online sales were the primary force behind the positive performance for the final quarter of last year, with its website witnessing a 9.1 per cent rise in sales in the period compared to just 0.6 per cent for its stores.
However, sports clothing retailer JD Sports saw just a 1.8 per cent rise in like-for-like sales, below where it had predicted them to be, forcing its shares down by 23 per cent to 119p.
It blamed a more aggressive stance on cutting prices by its rivals as a major factor, as well as warmer weather denting sales of seasonal clothing.
The firm’s statement said: “Apparel revenue growth was impacted by milder weather from the second half of September, while the peak trading season across the market was softer and more promotional than we anticipated.”
For JD Sports, its boss Régis Schultz said the firm had made “good progress” on its five-year plan.
“We delivered global organic revenue growth of 6 per cent in the period, against very tough comparisons with last year, and opened over 200 new JD stores in the year,” he said.
“Our key markets have seen increased promotional activity during the peak trading season, driven by a more cautious consumer, but we continue to grow market share.”
