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Next beats Christmas sales target

Online sales more than offset a lacklustre performance in physical stores
Next beats Christmas sales target


Next (NXT) beat its own expectations for trading in the final three months of 2019. It clocked up sales growth of 5.2 per cent, versus an internal forecast of around 4.1 per cent. The outperformance prompted a modest upgrade to profit expectations for the coming financial year, up £2m to £737m.

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Next’s growth came from its online business, with full-price sales growth of 15.3 per cent more than offsetting a 3.9 per cent drop in retail store sales. Next said improvements to stock availability and colder weather in November helped.

Analysts at Peel Hunt took management’s guidance of 3 per cent sales growth in the coming year as a potential “microcosm of sector thinking”, noting it was “beatable”, but in light of the ongoing challenges in physical retail “it would be a brave executive team to start shooting for the stars just yet”.

Management reiterated its intention to return excess cash to shareholders, with plans to return at least half of its £145m surplus in the first half of the year. It will attempt to do this through a share buyback, but failing that it will pay out a special dividend. Underlying surplus cash generation is expected to reach £315m in the coming year, but Next warned that an acceleration of corporation tax collection would result in an additional £70m outflow to HMRC.