Major high street stores performed better than expected during the Christmas period, with Next improving its profit outlook as a result, painting a positive picture for retail.
At Next, sales were up nearly 5% in the nine weeks to 30 December in the same period of 2021, well above the retailer’s estimated 2% drop and £66m better-than-expected.
As a leading high street retailer, Next is seen as a pioneer in the retail industry.
The company increased its full-year profit before tax guidance by £20m to £860m, up 4.5% from 2021, but said it remained “cautious” in its “outlook for the coming year”.
In a trade update, Next said cold weather was behind some of the “dramatic increase in sales”.
“We believe the strength of demand for cold weather products in December is partly a result of subdued demand in the unusually hot October and November.”
But the picture for the coming year looks more depressing. Full price sales are expected to fall by 1.5% and profit before tax by 7.6% to £795 million compared to the current year.
For now, Next shares rallied after the news, with the share price hitting a high not seen since mid-August.
Other major outlets, icy weather and railway strikes.
Boots also reported that sales are increasing as Christmas approaches and Black Friday is the biggest digital sales day ever.
Boots’ parent company, Walgreen Boots Alliance, said in a business update that increased online and retail sales helped overall sales at Boots UK increase by 4.3% year-on-year.
Online sales became 18% of Boots’ overall business – more than double from pre-pandemic times – and retail sales rose 8.7%, offsetting declines in COVID-19 services such as pharmacy sales and vaccines.
Pharmacy sales decreased by 0.9% from October to December 2022 as demand for COVID-19 services fell compared to the same three months of the previous year.
An 8% improvement in visitor numbers helped boost retail sales.
Greggs said sales in the last three months of 2022 increased by 18.2% compared to the same period in 2021. Throughout the year, sales increased by 17.8% compared to 2021.
Strike action and weather winds Less than the interruption caused by COVID-19 The pandemic, Greggs said in a trade update.
Referring to increased sales, “This reflects a positive trading pattern leading into the Christmas period and softer trading conditions in the similar quarter of 2021 as a result of the disruption caused by the Omicron variant of the coronavirus.”
The baker said 186 new shops opened during the year and 39 closed.
He was more optimistic than Next for the year ahead and told investors “We are entering 2023 in a strong financial position that will allow us to invest in stores and supply chain capacity to bring Greggs to even more customers in the UK.”
Reduced budgets may not be a bad thing for Greggs. “While market conditions in 2023 will continue to be challenging, our value-for-money offering of freshly prepared food and beverages is critical as consumers want to manage their budgets without sacrificing quality and taste,” the statement said.
Discount retailer B&M also raised its full-year profit forecast as revenue rose 12.3% to £1.56 billion in the 13 weeks to 24 December. As a result, profit before tax is expected to be between £560m and £580m, above analysts’ expectations.
Increased prices caused double digit inflationpushed by high energy costs and supply chain challenges, cost of living crisis It is expected to deplete disposable income and put pressure on economic activity as Christmas approaches.