Next’s better than anticipated Christmas profit, driven by online sales

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CEO warns that earnings will all but be eroded by recent restrictions on Covid

As sales moved from closed stores to its website, Next has emerged as a winner from a tough Christmas season, but the fashion chain cautioned that new closure measures would wipe out the extra profit.

Simon Wolfson, chief executive of the retailer, said profit from better-than-expected sales in November and December would be almost completely eroded by new lockdown measures in England forcing shops to close, as well as costs arising from the disruption of large conventional Boxing Day sales.

The retailer said the pandemic is also delaying the arrival from the Far East of container traffic. Many of its shipments arrived two to three weeks late, Wolfson said, and inventory levels were 10 percent lower than two years earlier.

Wolfson hopes that by the end of March, inventories will “return to normal levels”

Sales were 1.1 percent lower than 2019 in the nine weeks to Dec. 26 – a much better outcome than the 8 percent fall the company had expected. U.K. Though Store sales fell by 43% and online sales rose by 36%.

The company said its ability to clear reduced sales inventory had been restricted by the closing of about half of its stores.

It would be capable of clearing around a quarter of its stock via the website, but this would cost the company £ 5 million more than sales in the shop.

Next had estimated that the pandemic would have a devastating effect on its finances at the beginning of the Covid crisis, but sales held up better than expected, boosted by new home furnishings, loungewear and children’s apparel.

The next outlook for the coming fiscal year is a profit of £ 670 million, an estimate that stores are likely to be closed in February and March and revenue will rebound to 2019 levels.

Under the long-time leadership of Wolfson, Next has become one of the industry’s most resilient retailers.

The shares of the firm have rebounded sharply from a dramatic decline last year when the U.K. First time, locked.

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