Next's Christmas trading: What the analysts say

“As in previous years, the company stuck to its Sale timetable, starting on 26 December, despite an increase in discount activity on the high street in the lead up to Christmas. Brand sales (including the Directory) over the period increased by 11.9%. Retail increased by 7.7% while Directory sales increased by 21.0%.

“The company appears to have benefited from having a range, including knitwear, nightwear and accessories, which was ‘on trend’ and consumers having more confidence in its on-line offer. We are raising our full-year 2014 pre-tax profit forecasts from £666m to £695m taking earnings per share up from 317p to 331p and making similar revisions to our subsequent year forecasts.

“We are upgrading our recommendation from hold to buy and raising our targte price from 5200p to 6500p reflecting the upgrade and our view that the stock should at the least be rated in line with the sector. The stock, in our view, is well supported by its superior returns, prospects and the strength of its on-line business when one considers the valuation the market puts on pure play retailers.” - Freddie George, Cantor Research

“Next’s Christmas trading was ahead of consensus expectations following a strong December outcome, a notable outperformance against a weak and heavily discounted apparel market. Next has announced a 50p special dividend (£75m) to be paid in February, with future quarterly special dividends to be paid given the share price is ahead of the group’s buyback limit, implying an attractive yield of around 6%.” John Stevenson, Peel Hunt Research

“A very strong set of results from Next, which were significantly ahead of expectations, indicates three things about the festive trading period. First, despite the late start it was not the disaster many have suggested; this is especially so given the robust numbers coming from a number of retailers, now including Next. Second, although the high street was engulfed in sea of red promotional tickets, it was not necessary to discount to achieve success. Third, a strong multichannel platform was a critical success factor.

“That Next has a strict policy of not discounting outside of sales periods continues to pay dividends and is something some other retailers should take heed of. Of course, holding the line on discounting requires that the product is right, and on this front Next’s Christmas range was masterful. An impressive array of knitwear, much of which capitalised on the trend for festive patterns and designs, was in evidence across the trading period.

“This was joined by a compelling selection of gifting items. Next also capitalised on partywear with a number of sophisticated pieces including lace dresses and silk jumpsuits, many of which were showcased by supermodel Kendra Spears. In short, Next’s range pushed the right buttons with consumers this Christmas.” - Neil Saunders, Conlumino