British fashion giant Next today reported a surge in online sales over the Christmas period that looks set to boost profit beyond expectations for the year and help offset high street losses.
Full-price sales fell 1.1 per cent in 2020 compared to the year before, beating its central guidance of an eight per cent annual loss given in October.
Shares rocketed 8.1 per cent to 7,462p at market open.
Strong sales in childrenswear, loungewear and home products during the pandemic helped push online sales up 36 per cent in the three months to Christmas.
The strong e-commerce performance helped offset a 43 per cent slump in high street sales in the run-up to the festive season, which saw party clothes sales plummet in the face of cancelled Christmas parties.
It also helped Next boost its online customer base by almost a quarter over the year, forcing profit up from a previous estimate of £365m to an expected £370m.
However, profits gained during the strong festive period were “almost entirely offset” by the expected hit to January full price retail sales and the additional costs of clearing clothing left unsold in the fashion group’s stores.
Full price sales for January are expected to take a 14 per cent hit, as the company braces to shutter 90 per cent of its stores under fresh lockdown restrictions.
Next added that it was currently suffering from three-week delivery disruptions due to supply chain traffic from the Far East.
“The continued uncertainty caused by the Covid pandemic, and its potential economic impact, mean that it is harder than ever to predict sales and profits for the year ahead,” the group said in a statement.
However, analysts remained optimistic that a strong Christmas performance could help the fashion firm survive the latest bout of lockdown measures.
“Next continues to wade through treacle, with further online growth being offset by another blow to its retail business,” said Richard Hunter, Head of Markets at Interactive investor.
“Even so, the group is continuing to navigate a difficult time with aplomb… With its famed expertise in financial management, Next is a prime example of scenario planning and tends also to lean on the side of caution.”
It comes on the back of reports last month that Next is mulling plans to buy up Arcadia, Sir Philip Green’s collapsed retail empire.
The high street retailer is said to be holding detailed discussions with Davidson Kempner about a combined offer for Arcadia, the owner of Topshop, Dorothy Perkins and Miss Selfridge, after it fell into administration last year under the weight of the pandemic last month.