Next has issued a trading statement covering the eight weeks to 25th December, and states that full-price sales were up +20% Yo2Y – £70m ahead of previous guidance for the period.   

Accordingly, the retailer has increased its full year profit before tax guidance by +£22m to £822m (which would be up +9.8% Yo2Y).

"Our initial guidance for the year ending January 2023 is for full-price sales to be up +7% versus the current year (ending January 2022)," states Next. "We estimate that profit before tax will be up +4.6%, at £860m." Next's board has declared a further special dividend of 160p per share to be paid at the end of this month, and intends to return to its ordinary pre-pandemic dividend cycle this year.

Online sales during Q4 were up +45% Yo2Y, but store sales in the UK an Ireland were down -5.4%.

"We were expecting sales growth in Q4 to be weaker than Q3, however, a strong revival in Next-branded adult formal and occasionwear significantly improved sales throughout the final period," states the retailer.    

"In the run-up to Christmas our stock levels were materially lower than planned. We also experienced some degradation in delivery service levels as a result of labour shortfalls in warehousing and distribution networks. The fact that our sales remained so robust in these circumstances is, we believe, testament to the strength of underlying consumer demand in the period."

Among several unknown factors which could impact business this year, Next has revised its estimates for selling price inflation in the year ahead, "mainly as a result of the unanticipated persistence of higher freight rates into the back end of the year ahead, along with some further increases in manufacturing costs. In addition to the increases in the cost of our goods, we are also experiencing increases in UK operating costs, mainly as a result of UK wage inflation".