Next reports festive sales rise, but cuts profits forecast

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​Fashion chain Next ​expects earnings to fall this year despite decent Christmas trading.

The firm, ​which is the first major listed retailer to update on Christmas trading,​ ​said high street store sales slump​ed​ 9.2​ per cent​ over the Christmas trading period, ​al​though this was offset by a 15.2​ per cent​ surge ​in ​online​ shopping​.​

Next expects retail sales to be down 8.5 per cent and online sales to be up 11 per cent this year

Next expects retail sales to be down 8.5 per cent and online sales to be up 11 per cent this year

The group said full-price sales rose 1.5​ per cent​ between October 28 and December 29, in line with expectations.

​However, it downgraded its profit forecast to £723​m for the year to January, from the £727​m previously expected, and said the next financial year will remain under pressure.

It blamed the gloomier profit outlook for the current year on higher sales of seasonal products, such as personalised gifts and beauty products, which have a lower profit margin than its clothing ranges.

​The group said​ it expect​s​ retail sales to be down 8.5​ per cent​ and online sales to be up 11​ per cent this year, although it warned that the prediction ​comes with a "high degree of uncertainty" and does not factor in the "potential benefits of a smooth transition or the downsides of a disorderly Brexit".

Chief executive Lord Simon Wolfson said November was hit hard by unusually mild weather, but that spending bounced back in December.

A prominent supporter of Brexit, Lord Wolfson ​said the fears over the impact of current economic uncertainty on consumers were overdone.

He said: "People are maybe a little bit more cautious, given ​​the uncertainties around Brexit.

"But I think that's as strong as you can put it."

Next is the first of the major retailers to report back with festive figures, with the sector's performance watched closely for signs of a Brexit impact on consumer sentiment.

There have been fears of a difficult season for retailers after Asos issued a pre-Christmas profit warning following a di​sappointing November, while music chain HMV became the first high street casualty last week when it appointed KPMG ​as a​dministrators​.