Next's share price soared this morning after it beat analysts' expectations with its second-quarter figures.
Forecasts predicted Next, which suffered it first fall in profits for eight years in March, would post a three per cent fall in sales today. However, its full-price sales in the quarter to 29 July rose 0.7 per cent year-on-year.
In May, sales were down three per cent, but trading picked up in June and July, when sales were up by three per cent and 3.9 per cent respectively.
At time of writing, Next's share price was up 9.4 per cent to 4,379p.
Investec's Alistair Davies said that although some analysts would point to the 7.4 per cent fall in Next's retail sales, this "missed the point". Next has been investing well in its business, he said, which means it has the flexibility to survive the structural changes taking place in the retail sector.
Jon Copetake, chief retail analyst at the Economist Intelligence Unit, said:
Next will be encouraged by an overall rise in sales, driven by catalogue and online channels as well as by the market response to these numbers and the news of a special dividend. However, the decline in same store sales is a cause for concern given the boost that the warm weather should have provided and the relative performance of other clothing retailers who seem to have benefited more from July's heatwave.
The update from Next provided a "welcome tonic to shareholders", Hargreaves Lansdown's George Salmon said. The company's share price has halved since it hit a high in 2015, and "behind-the-curve" clothing ranges have been dragging on sales, he added.
"Investors should be careful to remember that one swallow doesn’t make a summer, and Next hasn’t upgraded profit forecasts on the back of these numbers. Indeed, today’s jump in the share price has only taken the group back to where it was in May," Salmon said.