Next and John Lewis defy gloom with strong Christmas growth

Christmas shoppers: both Next and John Lewis reported strong festive period sales
Christmas shoppers: both Next and John Lewis reported strong festive period sales

Next has followed John Lewis in reporting strong sales growth over Christmas, defying tough trading conditions in the process.

Next saw its sales from 1 November to 24 December increase by 3.9% year on year, with the growth being driven by an 11.2% surge in its online Next Directory business.

The retailer is now expecting profit before tax of at least £611m for the full year ending January 2013, a year-on-year increase of 7.1%.

Next announced its results this morning (3 January), the day after John Lewis revealed bumper Christmas trading following a like-for-like sales growth of 13.0% for the five weeks to 29 December.

John Lewis credited its Christmas TV campaign, which featured a snowman on a romantic quest, with ensuring it was talked about in the key Christmas trading period.

Peter Ruis, brand and buying director at John Lewis, said: "Our Christmas TV advertising has become a real talking point over the past few years and ‘The Journey’ was no exception, notching up over 3 million hits on YouTube and seeing an incredible response from customers.

"The campaign was more integrated than ever, with our Snowman featuring on in-store branding, products such as the Knit your own Snowman kit, and even travelling around the UK to meet customers face-to-face.

"However, I think our ad resonated because people view John Lewis as an authentic brand. Great advertising won’t work in isolation, it needs to be backed up by inspiring products in our shops and a slick online operation, all of which combined this year to give us some great financial results."

Online sales for the five weeks were 44.3% up on last year, with the take-up of the service resulting in sales from Johnlewis.com now accounting for a quarter of the total John Lewis business.

Andy Street, managing director at John Lewis, said: "Sales at johnlewis.com broke through the £800m milestone during December, supported by an excellent performance from our click-and-collect facility, which allows customers the flexibility to buy online and collect from John Lewis and Waitrose outlets."

Next is predicting trading conditions will remain tough in 2013 due to price inflation rising ahead of wage inflation, resulting in a "subdued" consumer environment. 

As a result, the retailer will continue to manage the business "defensively" through cost cuts, while seeking sales growth by investing in the Next Directory online business.

Despite the good performances of Next and John Lewis, it is expected other retailers will have performed badly as consumer confidence suffered in December

Morrisons' house broker Jeffries is forecasting the supermarket's boss Dalton Philips will reveal a like-for-like sales drop during next week's Christmas trading update. 

Meanwhile, HMV is locked in discussions with lenders as it approaches a breach of its banking covenants after a poor start to Christmas trading. 

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