The fashion chain starts its January sales early ahead of the update

Fashion chain Next is set to shine a light on the health of the retail sector after the “crucial” Christmas shopping period.

Investors will be closely watching the clothing and homewares giant’s trading update on Thursday for details on its holiday season sales figures.

In August, chief executive Lord Wolfson said shoppers were likely to spend less in the second half of the year because the prices of its items were rising.

The cautious approach means there may be no big surprises for investors in Thursday’s post-Christmas update, although the final few weeks will be a “crucial pillar” of current consumer spending habits, analysts said.

The firm is expected to report a 2% decline in full-price sales for the fourth quarter of the year, compared to the same period a year ago.

But it expects pre-tax profits to reach £840m, up 2.1% on the £822m reported last year.

Russ Mold and Danni Hewson, analysts at AJ Bell, said: “Next is traditionally the last major retailer to hit the market with its end-of-year sales, but the cuts came in the run-up to Christmas this year, to suggested that the FTSE 100 listed firm has not proved immune to the challenges posed by inflation, uncooperative weather and the tightening of consumers’ pockets by the cost of living crisis.

“The projected fall over the festive period reflects not only the pressure on consumer incomes – and Next’s customers may be classic examples of the squeezed middle – but also the difficult basis for comparison, as last year benefited from an easing of the pandemic, An end. to congestion and pent-up demand.”

Amid a tougher economic climate, investors will also be keen to see if Next has seen an increase in buyers using credit options to finance their purchases.

A rise in “bad debts” could indicate that more shoppers have relied on credit that they will struggle to repay and will be used as a litmus test for the wider retail sector.

Meanwhile, Next announced it had bought rival fashion chain Joules for £34m in December, saving the troubled brand from collapsing into administration.

He followed the group that bought the brand, websites and intellectual property of furniture business Made.com, adding to the portfolio of household names now under his ownership.

While 19 Joules stores are set to close following the takeover deal, Next can reveal any other stores set for closure in its trading update.

Press Association