LONDON, United Kingdom — UK apparel and home-furnishings chain Next Plc lifted its profit forecast after a better-than-expected Christmas, in an upbeat signal for UK retailers contending with Brexit-related worries and the rise of online shopping.
Full-priced sales under the Next brand rose 1.5 percent in the 54 days through December 24, compared with the median analyst estimate for a 0.5 percent decline. Next also said cost pressure will ease over the coming 12 months.
The strong sales at Next, the first major UK retailer to report on Christmas shopping, should reassure investors at a time when fears over the sector’s prospects have been mounting. Brexit-fuelled inflation has squeezed consumer spending power and driven up sourcing costs, while brick-and-mortar clothing merchants have been losing share to online rivals as consumers shift to what Next described as “experiential spending at the expense of clothing.”
“We believe that some of these headwinds will ease as we move through the year,” the company said in a statement.
Next said costs will rise 2 percent in the first six months of the coming year and stay flat in the second half. The company raised its profit outlook for the current year, which ends in January, by £8 million, to a midpoint of £725 million ($985 million).
By Sam Chambers; editor: Eric Pfanner.