Next, once again, has defied UK high-street downturn and delivered better-than expected sales growth in the first three months.
The fashion and homewares retailer shrugged off spring’s wet weather to post a 5.7% increase in full-priced sales for the thirteen weeks ending April 27. This was ahead of the 5 percent growth it had predicted.
The retailer is seen as an indicator of the British high street. It has kept its guidance for the full year unchanged. It expects a weaker growth in sales in the second quarter, having benefitted from “particularly mild weather” between May and June.
It still expects a profit of £960m before taxes in its financial year 2024-25, up from record £918m in 2023-24. It also maintained its forecast that full-priced sales would increase by 2.5 percent over the course of the year.
Next is a multi-national retailer with 458 stores in the UK and a headquarters near Leicester. Total Platform, its ecommerce hub, provides services to help third-party merchants sell online.
Despite the rising cost of living and inflation, the FTSE 100 retailer has beaten the odds and increased its profit guidance several times in the last year.
Fashion retailer hopes that consumers will spend more as wages rise faster than inflation
Lord Wolfson, the chief executive of Aspley Guise in March, set a positive tone for the coming year. He said that wages would “rise faster than inflation”, and shoppers could spend more money on fashion. He also said that the consumer climate looked “more benign than it has in a number years”.
Retail sales are down across the entire retail sector as wet, windy weather has discouraged consumers from shopping on the high street. According to BDO, retail sales have fallen for six consecutive months.
RBC analysts said Next would benefit from the “improvement of UK real disposable incomes, although it may still be impacted by a lagged effect from higher interest rate.” Over the long-term, we think that Next should be able achieve a faster rate of growth in sales than the 2 percent that it has historically achieved.
William Woods, a Bernstein analyst, said that Next should also be able beat the sales forecasts due to “current UK clothing trends and Next’s position”.
Next shares rose by 56p or 0.62 percent to £90.64.