Next upgrades profit forecast as formal clothing lifts sales

// Next upgrades full-year profit forecast after warm weather and demand for formal clothing helped lift sales
// The fashion retailer’s sales performance exceeded expectations by £50 million in first half of the year

Next has upgraded its full-year profit forecast after warm weather and demand for formal clothing helped boost sales in the first half of the year.

The fashion retailer‘s sales performance exceeded expectations by £50 million, leading it to raise ts full-year profit guidance by £10 million to £860 million.

Full price sales were 4.7% stronger than expected in the second quarter to 30 July, which Next said was due to “unusually warm and dry weather in June and July”.

READ MORE: Next workers underpaid for months following payroll errors

Next said that on a year-on-year basis, online had “ground to a halt” as sales edged up 0.2%, stores were enjoying a “renaissance” with a 12% sales jump.

However, it said “we think that these changes reflect a short term reversal of pandemic trends, and are unlikely to be indicative of longer term trends in consumer behaviour”.

On a three-year comparison, Next online sales are 44.4% higher while store sales are up 4.7%.

Next full price sales are up 25.5% on 2019, while its finance interest income is up 2.4%.

“A marked return to formal dressing, perhaps driven by pent up demand for social events such as weddings, has also played to the strengths of the Next brand,” Next said.

However, the retailer added that the weather also had its disadvantages, with fewer customers coming to stores for its Sale during the heatwave, and those who did visit were much less likely to buy heavier products.

The stronger-than-expected sales performance is not expected to continue at the same rate, with the warm weather fading in the second half of the year, and the impact of inflation likely to hit consumer spending.

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