It may not have been a ‘golden’ fourth quarter for UK retailers in general, but once again Next (NXT) – typically the first company to issue a Christmas trading statement – delivered the goods with forecast-beating sales and profit guidance.

At the same time, supermarket groups Tesco (TSCO) and Sainsburys (SBRY) appeared to be the clear winners in the food aisles as shoppers spent a record £13 billion on groceries in December alone.

According to the most recent survey by the British Retail Consortium and KPMG, retail sales by value in December were up 3.2% on the previous year led, as has been the case throughout 2024, by food.

Non-food sales, which include clothing, homewares, sporting goods, DIY items and a whole raft of other spending, showed an increase for just the second time in nine months.

At Next, full-price sales for the nine weeks to 28 December were up 6% against company guidance of 3.5% and analysts’ forecasts of 3.8% although the company admitted that figure was flattered somewhat by the timing of its end-of-season sale.

Growth was driven by online sales, and in particular overseas internet buying, which rose 31% year-on-year, while sales in UK stores were 2.1% lower.

Nevertheless, Next looks set to join the exclusive club of UK retailers with billion-pound profits as it nudged up its forecast for earnings for the year to January 2025 to £1.01 billion.

Looking ahead, the firm expects sales for the year to January 2026 to rise by 3.5% to around £5.2 billion and profit before tax to grow at a similar rate to £1.05 billion, although it flagged higher operating costs would be a constraint on earnings.

Next also said it expected UK growth to slow as employer tax increases and their potential impact on prices and employment start to filter through into the economy, while overseas growth will moderate as the firm cuts back on its marketing spend.

For Tesco and Sainsbury, which are due to update the market on Christmas trading this Thursday (9 January) and Friday (10 January) respectively, the festive period was a resounding success as they took more market share from former Big Four rivals Asda and Morrison and put further clear water between themselves and the discounters.

The latest Kantar till roll data shows the UK’s two largest retailers added a combined 90 basis points or 0.9% to their share of grocery spending in the 12 weeks to 29 December, although the fact sales excluded spending on New Year’s Eve, unlike last year, may mean the gain is greater still according to some analysts. 

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