Tomorrow will see Next’s Christmas trading statement announced, the first from the major retailers. It will trigger the inevitable attempts to extrapolate from this an industry-wide view of business over the festive season. Next’s is always one of the more meaningful statements to emerge, and that in itself renders it unrepresentative. So many are rather variable in definitions, and making company or year on year comparisons can be misleading. Another key factor likely to mislead is that the company was one of the few not to engage in Black Friday or any other margin-damaging pre-Christmas discounting. And yet another is that Next is one of the sector’s strongest players with a very strong brand, fully integrated multi-channel strategy and a totally consistent relationship with its customers.
One of the most common errors of interpretation made with Christmas trading statements is to attach the same significance to each company. Relativity is everything. Strong numbers from a tiny player are eclipsed by weak ones from a much larger business, and vice versa. As each successive business reports, views of their significance needs to take full account of their relative size.
Next will have been one of the stronger performers. A critical element of the story of Christmas trading is of course margins. The unprecedented discounting will have huge repercussions and many will have paid a very heavy price for clawing sales forward.