Clothing retailer Next has raised its full year profit forecast by £7m after delivering a stronger than expected Christmas sales period.
The period yielded a 1.5% increase in full-price sales from November 1 to December 24, attributed to strong online sales for winter clothing as customers prepared for the cold weather.
Sales in retail stores dropped by 6.1%, but were partially offset by online sales up 13.6%, prompting improved central pre-tax profit guidance for the year to January 2018 to £725m from a previous estimate of £717m.
In the trading statement Next said: “Many of the challenges we faced last year look set to continue into the year ahead. Subdued consumer demand driven by a decline in real income, the increase in experiential spending at the expense of clothing, and inflation in our cost prices remain challenges for 2018.
“However, we believe that some of these headwinds will ease as we move through the year; we already know that cost price inflation will reduce to 2% in the first half and believe it will disappear in the second half.”
Guidance for 2019 profit is expected to generate about £300mn of surplus cash, which Next said intends to return to shareholders via share buybacks, subject to market conditions.