Next delights City with hike in forecasts

FASHION retailer Next yesterday told the City to upp its forecasts for the year after reporting a better than expected third quarter. <br /><br />Chief executive Simon Wolfson said: &ldquo;There was a noticeable pick -up in sales in October as we came up against the weak comparatives of the previous year: It was at this time last year that the publicity around the credit crisis and the demise of Lehman Brothers reached its height.&rdquo;<br /><br />Wolfson has frequently been regarded as an optimist in the City; at the group&rsquo;s last interims he proclaimed: &ldquo;It&rsquo;s a recession &ndash; not an Armageddon.&rdquo; <br /><br />And in fresh evidence of a change in consumer behaviour to a more frugal approach to spending Next reported that there was a year-on-year reduction in the number of customers going into arrears on their Next Directory accounts &ndash; which it believes is a reflection of general improvement in consumer finances. <br /><br />The firm, which runs over 500 shops in the UK and Ireland as well as a home shopping business, said sales at stores open over a year fell 1.3 per cent in the 14 weeks to 31 October.<br /><br />It compares with analysts&rsquo; forecasts of fall of about two to four per cent after a decrease of 2.5 per cent in the firm&rsquo;s first half to end-July.<br /><br />Sales at the firm&rsquo;s Directory home shopping business increased 5.1 per cent.&nbsp; In September Next forecast like-for-like retail sales would fall by 3.5 to 6.5 per cent in its second half to end-January 2010, with Directory sales flat to up two per cent.<br /><br />But it has hiked this guidance to a range of flat to down three per cent for like-for-like retail sales and a range of up four to six per cent for Directory sales. Next added that improved ranges &ndash; particularly in womenswear - and its early adoption of new trends had helped its performance, alongside a strong showing from the homeware ranges in the Directory business.<br /><br />Next said the market consensus for full year profit before tax was around &pound;442m.