Next had special Christmas

High street clothes chain Next had a good Christmas after all. A 2.9% jump in sales between 28 October and Christmas Eve was at the upper end of the fourth-quarter sales guidance range issued in October. Sales should improve in 2015, too, says the firm, and although this year's strong first half means much of that growth is tipped to occur in the second half of next year, news of another special dividend has helped send the shares higher.

Next was clearly cautious in the autumn, building in an extra cushion on the downside by cutting fourth-quarter sales forecasts from 4% to a range of -2% to +4%. It needn't have been. While retail sales crept up just 0.5%, the Next Directory catalogue and internet division leapt by 7.5%.

That means total sales for the year so far are up 7.7%. And, despite going into the End of Season Sale with far more stock than last year, clearance rates have been in line with expectations. Expect full-year pre-tax profit to be within £10 million either side of £775 million, says Next. That's £5 million ahead of the midpoint profit guidance issued in October and up 11.5% on last year. We'll get confirmation when the official numbers are released on 19 March.

And sales in 2015/16 are currently tipped to be between +2.5% and +7.5%. "Low inflation, an end to real wage decline, healthy credit markets and strong employment all paint a somewhat more positive picture than recent years," says Next, although this year's unseasonal warm weather gave half-year sales a boost. That's why first half sales next year will be at the lower end of the range before a pick-up in the second half as sales comparisons weaken. We'll get more detailed sales and profit ranges for the year to January 2016 in March.

There's a bonus for shareholders in the form of a special dividend, too. Next has not bought back any shares since 16 October because they've generally traded above the £64.25 upper limit for buybacks. That's why it's paying a 50p per share special on 2 February with an ex-dividend date of 15 January.

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