Shares at Next defy Covid gloom thanks to surging online sales 

Next has emerged as a clear winner from the High Street’s brutal Christmas after its booming online business cushioned the blow of store closures.

In an update that sent its shares to five-year highs, the fashion and homeware retailer said full-price sales in November and December fell just 1.1 per cent – far better than a predicted drop of 8 per cent.

That was after coronavirus restrictions forced many of its shops to close, sending sales tumbling by 43 per cent. But its online sales surged 38 per cent higher, almost wiping out those losses.

Simon Wolfson (pictured), Next’s chief executive, also warned that the gains were likely to be reversed in the coming months

Analysts said the ‘outstanding’ performance was unlikely to be replicated across the High Street, with fewer shoppers in stores before Christmas and at the sales afterwards.

Simon Wolfson, Next’s chief executive, also warned that the gains were likely to be reversed in the coming months. 

He expects roughly half of sales lost from the latest closures to go online this time around.

Next is forecasting profits of £370million for the year to January 31 – up from a previous estimate of £365million – and a return to pre-pandemic levels of profit, or about £670million, the following year.

Its shares closed 8 per cent, or 556p, up at 7468p, their highest since December 2015.

Wolfson, 53, said: ‘We were surprised the business did as well as it did. Our operations kept up with demand, which was something we were anxious about.

‘We are better positioned to deal with this lockdown than the first one.’

Childrenswear, home, loungewear and sportswear did particularly well, as people spent more time indoors, while an absence of events meant formal clothing and party clothing sold poorly.

In contrast, stationery shop chain Paperchase yesterday filed notice that it intends to appoint administrators, blaming coronavirus closures and said online sales had not been enough to make up the gap. 

Topshop owner Arcadia and department chain Debenhams are also among pandemic casualties. Richard Lim, chief executive of Retail Economics, said updates this month would show up the differences between retailers with strong online offerings and ‘those that do not’.

Richard Hyman, an independent retail analyst, added: ‘Next is a truly outstanding retailer. It is often called a bellwether, but in truth I doubt we will see many others putting out Christmas trading statements like this.

‘It was a horrendous year for the vast majority – Next is really in a class of its own.’

Next estimates the latest lockdown will still cost it about £18million this month and £40million in February and March.

It has taken a one-off £40million writedown on stores it now thinks could become loss-making sooner than expected, alongside a £12million boost to profits from a 53-week year. 

If it recovers 50 per cent of store sales lost in lockdown through its online arm, it forecasts full-price sales will only fall by 14 per cent overall.

‘We did not achieve that figure in the March lockdown and we achieved more in the November lockdown, but that is our best guess’, Wolfson added.

He also predicted that the shift towards online could become a permanent feature, putting shops that have failed to adapt in an even more perilous position.

Next has emerged as a winner due to its strong online platform.Wolfson said: ‘What we have seen is a continuation of trends towards more people buying more online this year – and the pandemic has accelerated that transition by two to three years.

‘If the transition we have seen is anything like the previous years, then you would expect a lot of those habits to persist. 

‘Although we do think some of the business will go back to stores, because that is what happened with the last lockdowns, but not all of it.’

Next has entered the fray to buy Sir Philip Green’s retail empire – as part of a consortium, – and it is only interested in certain unnamed brands.

Administrators running the collapsed Arcadia Group are seeking buyers for the firm, and Boohoo and Mike Ashley’s Frasers Group are among suitors.

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