* Sales in nine weeks to Dec 26 fall 1.1%
* Company had forecast a drop of 8%
* More than 50% of store sales in Nov lockdown went online
* Shares rise to five-year high
(Adds further comments, reaction)
By Paul Sandle
LONDON, Jan 5 (Reuters) - British fashion retailer Next
soundly beat its forecast for Christmas sales despite
COVID-19 lockdowns closing stores in November and the final
shopping days of December, resulting in another upgrade to
underlying profit guidance.
Shares in the company rose as much as 9% to a five-year high
of 75.22 pounds in early Tuesday trade.
Next, which has seen increased demand for children's clothes
and leisure wear during the pandemic, said full-price sales fell
1.1% in the nine weeks to Dec. 26 on last year, beating its
central guidance of an 8% drop given in October.
Chief Executive Simon Wolfson said its online operations had
coped with a spike in demand as more than half of the sales that
would have been made in store in November migrated online.
"We were surprised that the business did as well as it did
despite the November lockdown," he said in an interview. "Our
operations kept up with demand, which was something we were
anxious about in October."
The company has repeatedly upgraded forecasts since the
start of the pandemic. In April it predicted a 35% drop in
full-year sales and zero pretax profit, whereas now it sees a
16% drop in sales and underlying pretax profit of 370 million
pounds.
Next, the first major UK listed non-food retailer to update
on Christmas trading, has benefited from its long-established
online operation, which recorded a 38% rise in full-price sales
in the fourth quarter up until Dec. 26.
Rivals with weaker or no online operation, notably AB Food's
Primark, have seen far larger drops in sales.
Next's latest upgrade is its fourth in five months, although
two one-offs - a 40-million-pound provision on the value of
store leases and a 12-million-pound boost from an additional
week of trading - result in new pretax profit guidance of 342
million pounds for the year to the end of January.
It anticipated a 14% loss of full-price retail sales in
January due to a third national lockdown in England.
Wolfson said about half of lost store sales would migrate
online in the new lockdown, which will span the end of its
current year and the start of its next.
"That may be ambitious," he said, although he added that its
warehouses were now COVID secure. "We are better positioned to
deal with this lockdown than the first one."
For its 2021/22 financial year, its central scenario which
sees disruption in the first half and a recovery in the second,
is for sales on a par with its 2019/20 year, and pretax profit
of 670 million pounds.
($1 = 0.7358 pounds)
(Reporting by Paul Sandle; Editing by Kate Holton, Mark Potter
and Pravin Char)
Next (NXT)
