Next sales jump on back of hotter weather and higher pay
The retailer, which operates around 500 stores, revealed trading has been ‘materially better’ than the sales guidance it gave shareholders last month.
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Your support makes all the difference.Fashion brand Next has revealed that warmer weather and continued wage increases have sparked a jump in sales in recent weeks.
On Monday, the high street retailer lifted its sales and profit guidance for the year as a result, sparking a jump in the company’s shares.
Next, which operates around 500 stores, said trading has been “materially better” than the sales guidance it gave shareholders last month.
Full-price sales have been up 9.3% over the past seven weeks, compared with guidance predicting a 5% decline.
The company said it has therefore surpassed its predicted full-price sales by around £93 million.
As a result, Next said it has upgraded its sales guidance for the year by £137 million and increased its full-year profit expectations by £40 million to £835 million.
The onset of warmer weather has made a significant difference to our performance
The retailer told shareholders the sharp improvement was partly driven by the weather.
“The onset of warmer weather has made a significant difference to our performance, particularly coming after a wet and cold April,” it said in a statement.
It added that it believes annual pay rises helped trading, after many people received their annual bonuses in April while there was also an increase in the national living wage.
The retailer added: “If recent pay rises and the sudden change in weather have indeed contributed to the current over-performance, then it is reasonable to expect that the effect will diminish over time because ongoing inflation will slowly erode the positive effect of annual pay increases.
“This is why we are not anticipating the current performance to continue at the same level going forward, albeit we have moderately improved our guidance for the rest of the year.”
Analysts Ben Hunt and Kate Calvert at Investec said: “Clearly top-line momentum is looking strong at Next and we would highlight today’s trading update is positive for all clothing retailers, particularly ABF, Boohoo, Asos, Marks and Spencer and JD Sports.
“Indeed, better sales momentum may alleviate some fears for an anticipated promotional market, given the late start to the summer.
“However, we still have some ongoing concerns that the online business is beginning to lose momentum.”
Shares in the company were 4.5% higher at 6,728p on Monday afternoon as a result.