The high-street bellwether said that full-price sales for the eight weeks to Christmas Day were up 20 percent on pre-pandemic levels, £70million better than it had forecast. As a result, it believes its pre-tax profits for the 12 months to the end of January will be £822million, £22million ahead of expectations and 9.8 percent up on pre-Covid times. It will also pay a special dividend to investors of 160p per share, worth £212.7million, at the end of the month.
While Next believes its sales will grow seven per cent this year, it warned that the rising cost of living, tax increases and people exhausting their savings or choosing to spend on overseas holidays and social activities could dent its growth.
“Forecasting sales for the year ahead is unusually difficult and the buoyancy of recent months makes it all the harder,” it said.
Elsewhere, discount chain B&M European Value Retail said that it upgraded its full-year profit forecast to between £605million and £625million, following strong trading over the 13 weeks to Christmas Day.
Its third-quarter revenues were 0.1 percent ahead of the previous year, when lockdowns boosted its business.
The resilient trade at Next and B&M comes despite the tough conditions facing the high street.
According to the British Retail Consortium (BRC), Omicron deterred people from visiting shops, leading footfall to drop 18.6 per cent last month, compared to pre-pandemic levels.
For 2021 as a whole, visitor numbers to physical retail locations was down more than a third.
Helen Dickinson, BRC chief executive, said the Covid variant had “wiped out” most of the progress retailers had made in the four months after restrictions were lifted.
She added: “With Christmas out the way, time will tell if shoppers return to their local high streets to embrace January sales and the arrival of spring collections. Still, retailers may have to work twice as hard to tempt many consumers back into the cold this January.”