Next's shares soared by 4.4% to 8,442.00 pence per share in London on Thursday morning following robust Christmas trading, prompting the company to revise its profit outlook.

During the nine weeks leading up to December 30, the fashion and homeware retailer witnessed a significant surge in full-price sales, marking a 5.7% increase compared to the previous year. This surpassed earlier expectations by GBP38 million, outperforming the anticipated 2.0% year-on-year growth projection. This period is part of Next's fourth quarter, culminating on January 27.

Sales momentum heightened as Christmas approached, with a remarkable 10% rise in full-price sales in the weeks commencing December 17 and December 24.

Next highlighted its well-managed stock levels, entering the end-of-season sale with 12% less surplus stock than the previous year. Anticipated clearance rates during the sale period are expected to align closely with the previous year's performance.

As a result of this strong performance, Next now anticipates a pretax profit of GBP905 million for the financial year 2024, an increase of GBP20 million from its previous projection. This reflects a 4.0% year-on-year rise. The company has consistently revised its profit outlook upwards.

The company attributed the GBP20 million increase in profit expectations to a sales beat of GBP17 million to date and an upgraded forecast for full-price sales in January, contributing GBP3 million.

Excluding brand amortisation, Next forecasts a pretax profit of GBP914.7 million for the year, indicating a 4.6% rise from the previous year's GBP874.7 million.

It expects full-price sales to reach GBP4.78 billion for the year ending later in January, surpassing its November estimate of GBP4.74 billion, reflecting a 4.0% year-on-year increase.

Looking ahead to the year ending January 2025, Next foresees a 2.5% increase in full-price sales from the expected levels of financial year 2024. The company predicts a pretax profit of GBP941.2 million, signifying a 4.0% rise from the GBP905.0 million projected for the current year.

Excluding brand amortisation, Next forecasts a pretax profit of GBP960.0 million for the following year, representing a 5.0% increase from the GBP914.7 million predicted for the ongoing year.

Despite positive market indicators such as rising wages outpacing inflation within their product range, Next remains cautious about potential risks. Concerns include a potential decline in the employment market, mortgage rate fluctuations, and supply chain vulnerabilities, especially regarding Suez Canal access that might cause stock delivery delays in the coming months. Photo A P Monblat, Wikimedia commons.