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.
Chief executive Simon Wolfson said: “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.”
Wolfson has frequently been regarded as an optimist in the City; at the group’s last interims he proclaimed: “It’s a recession – not an Armageddon.”
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 – which it believes is a reflection of general improvement in consumer finances.
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.
It compares with analysts’ forecasts of fall of about two to four per cent after a decrease of 2.5 per cent in the firm’s first half to end-July.
Sales at the firm’s Directory home shopping business increased 5.1 per cent. 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.
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 – 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.
Next said the market consensus for full year profit before tax was around £442m.