High street chain Next reveals sales beat forecasts in recent months

Total full-price sales, which excludes discounts and clearance items, increased by 9.2 per cent over the 13 weeks to August 1, compared with the same period last year.

This comes in above the 4 per cent increase that the retailer was forecasting for the period.

In the UK, sales were up by 2.8 per cent for the quarter, with online shopping driving the increase while stores sales decreased.

Meanwhile, online international sales soared by 37 per cent year-on-year, according to the latest update to investors.

Next said the “over-performance” was partly due to weather in the UK being warmer than anticipated, with temperatures in June and July soaring, as well as spending more on profitable marketing campaigns.

It also pointed to the release of pent-up demand in the Middle East and Northern Europe following a weaker start to the year for both regions.

Trading in Next’s overseas business have been affected by the Iran war, which began at the end of February, with the Middle East region accounting for around 6 per cent of the group’s annual sales.

But chief executive Lord Simon Wolfson previously said that it planned to raise prices in some overseas countries by as much as 8 per cent to offset the impact.

Next said it was now expecting its full-year pre-tax profit to be £25 million above previous estimates at £1.24 billion, which would be 7.3 per cent higher than the year before.

It is the second time this financial year that the company has upgraded its outlook for earnings.

Julie Palmer, managing partner at advisory group BTG, said: “The fashion retailer remains not only undeterred by the supply chain cost pressures from the war and disruption on the Strait of Hormuz, but even seems to have underestimated the resulting pent-up demand in some markets that has worked in their favour.

“Even as the heatwave has seen retail footfall drop, Next has bucked the trend with resilient overall sales as people deck out their summer wardrobes both in the UK and internationally.”

Richard Hunter, Head of Markets at interactive investor, commented: “Next has done it again, breezing past its own estimates which has led to yet another profit upgrade for the year as a whole. The upgrades to Next’s forecasts for the year ride on the coattails of the group’s unswerving momentum.”

Duncan Ferris, analyst at investment platform Freetrade, said: "Next has once again smashed sales forecasts as its headline numbers appear to shore up its status as one of the FTSE’s star performers. “However, its performance looks a little wonky, with overseas success overshadowing a more subdued performance at home.

“Starting with the standout, Next’s spectacular Q2 international online sales growth was 36.9 per cent as it benefitted from an unleashing of pent up demand in Northern Europe and the Middle East.

"That business is becoming an increasingly important growth engine, but Next expects performance to moderate in the second half of the year. Domestically, Next still achieved growth but things were a bit more restrained.”