Next managed to avoid any sign of the high street gloom over Christmas as the retailer revealed sales soared 11.9 per cent, heaping the pressure on rival Marks & Spencer to follow suit.
Several retailers introduced heavy discounting in the weeks before Christmas, but Next held firm and only launched its sale from Boxing Day, denting suggestions that pre-Christmas reductions cannot be avoided.
The jump in sales, up 21 per cent through its online operation Next Directory and 7.7 per cent in its stores, means the company will now offer a £75m cash payout to shareholders in a series of special dividends over the rest of the year.
The group’s chief executive and Tory peer Simon Wolfson said 50p a share will be paid out next month, with a further payment in May and potentially every quarter onwards. It means Lord Wolfson could earn an extra £3m a year due to his personal shareholding, or £750,000 for every quarter the special dividend is paid.
He introduced the special dividend to replace a £296m share buyback scheme for as long as shares remain above 5800p. On Friday night shares in Next closed at an all-time high, up 10 per cent at 6085p.
Lord Wolfson said: “Some retailers have a good period and others a bad. We’ve had a good one, but we don’t want to crow about it. It means we will have tough comparatives next year. This has been the best Christmas we have had since the credit crunch.”
He stood by Next’s decision not to introduce sales before Christmas, unlike rivals such as Debenhams which was forced to issue a profit warning on Tuesday after heavy discounting, and added: “We never have discounted before Christmas and we never discussed it. It’s so important to give customers confidence in our prices and we don’t change our stance on that.
“We don’t want customers to think that something that is full price will be on sale a week later.” Next had such a successful Christmas that there is now 11.5 per cent less stock available because of full-price sales.
Sales of Christmas jumpers and the onesie craze helped to increase sales, and the period was strong enough for Lord Wolfson to tell investors that profits are likely to be higher than previously expected.
Pre-tax profits are now expected to be up by as much as 12.6 per cent to £700m and will beat larger rival Marks & Spencer for the first time in its history.
Next breaks down sales on a week-by-week basis to reveal the impact of external factors such as weather. They show that only four weeks since July 28 have seen sales drop.
Analysts were full of praise for the business. UBS said Next had avoided “the promotional bunfight elsewhere in the sector.” And analysts at Oriel said it delivered “a master class in how to profit from a changing retail environment”.
All eyes will now turn to M&S next week, with chief executive Marc Bolland set to reveal whether it had a successful festive period. M&S faced criticism for launching a 30 per cent discount across everything just days before Christmas.