Seasonal cheer for Next

The Investment Column

Next is very much in the Marks & Spencer camp when it comes to Christmas trading statements. Both believe that brevity is a virtue and yesterday's effort from Next ran to all of three sentences. But when your numbers are as good as these no one is going to worry.

Next clearly enjoyed a very merry Christmas with combined sales in the 24 weeks to 11 January up 16 per cent on the same period last year. Star performer yet again was the Next Directory catalogue, where sales were 26 per cent higher. The stores also showed good growth with sales up 14 per cent on selling space 5 per cent higher.

But shareholders who have beamed with pleasure as they have watched the meteoric growth of Next shares in the last six years will always ask the same question. Have I had the best of the run and should I bail out? Probably not.

For some observers the outstanding success of the Next formula remains something of a mystery. The shops always look busy but not that busy. And the merchandise is good, but is it streets ahead of rivals? Figures like this suggest consumers think it is.

Can Next keep it up? Next Directory still has plenty of scope for growth though it will not be able to deliver 26 per cent increases every year. The market may get more competitive with the Littlewoods deal with Freemans consolidating the industry. But Next is well advanced with the direct approach to mail-order selling that rivals are only just beginning to copy. For both the high street stores and the directory, the strength of consumer spending and the coming building society windfalls will benefit retailers with strong brands like Next.

Yesterday's numbers were good enough for analysts to leave their full- year profit forecasts unchanged at pounds 157m. With the shares up 12.5p to 541.5p yesterday they trade on a forward rating of 18. Not cheap but still worth holding.

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