Next’s resilient performance over the Christmas period will help boost its full year results but will this be the cause of its weaker performance in 2023?

Next announces its full year results on Wednesday, following a stronger than expected trading statement over the Christmas period which saw investors turn bullish on the stock.

Next shares are up almost 15% over the last three months, following a resilient performance in its Q4 results as consumers continue to be tested by stubbornly high inflation.

In the nine weeks to December 30, total full price sales increased 4.8%, as weaker online sales were held up by a stronger performance in retail, up 12.5% as consumers returned to stores following years of lockdown restrictions.

As you can see, much of its strong sales growth in Q4 was driven by the festive season, suggesting the early months of 2023 may suffer as consumers look to cut back after a expensive Christmas.

Consumer spending has continued to exceed retailers’ forecasts, despite inflation increasing to 10.4%. As a result, Next stated that they anticipate full year sales to be £4.6bn, up 6.9% and group profit before tax to increase 4.5%.

But with much of its strong performance aided by the build-up to Christmas, can Next maintain this resilience in 2023?

Next have already reported an 8% price increase to prices during the spring/summer and a further 6% in autumn, which may be detrimental to its sales this year given consumers are already facing a difficult period. However, it may be essential for the group to maintain its margins going forward.

Thus, Next are remaining cautious over the coming year, anticipating full price sales to be down 1.5% and profit before tax to fall 7.6%.