Next has increased its full-year profit outlook after a strong Christmas period.
In the eight weeks to boxing day, full-price sales jumped 20% compared to the two years previously. Full-year profit before tax guidance has increased from £22m to £822m.
“In the run up to Christmas our stock levels were materially lower than planned. We also experienced some degradation in delivery service levels as a result of labour shortfalls in warehousing and distribution networks,” said the group in a trading update.
“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.”
Despite the strong performance at Next, the group has warned of disruption in the year ahead and will not be immune to rising inflation.
“For all the tales of woe on the high street, there is one shining jewel to be found in the form of Next. There aren’t many bricks and mortar retailers dishing out special dividends or upgrading guidance multiple times over,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.
“Next’s impressive performance has partly been down to returning demand for formal and occasionwear, as customers got ready for a festive season with a bit more cheer compared to last year. But Next has also managed the business very well – stock levels have reduced, and labour shortages didn’t derail performance. The group’s stellar online business is to thank for propping things up, with another run of double digit growth meaning reducing physical shop sales aren’t causing a headache.