Warm glow for Next’s profit outlook

Fashion retailer Next has hiked its full-year profit outlook after enjoying a warm weather boost to sales.
Next has hiked its full-year profit outlook after enjoying a warm weather boost to sales.Next has hiked its full-year profit outlook after enjoying a warm weather boost to sales.
Next has hiked its full-year profit outlook after enjoying a warm weather boost to sales.

The group said full-price sales for the six months to July 25 were up 3.5 per cent, picking up from first-quarter growth of 3.2 per cent. The half-year figure beat the top end of the firm’s guidance for growth of 3 per cent.

Week-by-week sales figures showed “continued volatility of consumer demand”, with takings up year-on-year by more than £10m in a couple of weeks and down by nearly £6m in others.

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But the last six weeks of the period saw successive growth as sunshine brought consumers on to the high street.

Next said: “We believe the improvements experienced at the end of the season were mainly driven by warm weather.”

The retailer said that of its 3.5 per cent sales improvement, 1.7 per cent came from the opening of “profitable new space”. Full price sales for stores were up 0.8 per cent and for its catalogue and online arm, Next Directory, there was an increase of 7.5 per cent.

Total sales including marked-down items were up 3.3 per cent. Next said total stock left over for its end-of-season sale was up 4.8 per cent on last year, with clearance rates lower but in line with internal forecasts.

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The retailer hiked its central profit forecast for the full year from £810m to £825m, a rise of 5.5 per cent on the prior year, in line with market consensus. It also lifted its prediction for sales growth for the year to a range from 3.5 per cent to 6 per cent.

Next made clear that the increase in the sales target was a result of what had been achieved in the first half of the year with no change to the forecast for the second half.

The group said it planned to pay a special dividend of 60p a share on November 2.

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