Thursday 6 May 2021 8:07 am

Next raises profit outlook on strong winter sales

Next has raised its profit outlook for the second time in two months as the high street retailer reported stronger than expected sales for the winter period.

The group raised its pre-tax profit guidance for the year to £720m, up from £700m forecast in April.

Shares jumped 0.9 per cent to 8,200p at market open.

It comes after Next, which trades from about 500 stores around the country as well as online, made a stronger recovery than anticipated at this stage of the pandemic, delivering a £75m sales surplus in the first quarter.

Full price sales in the 13 weeks to 1 May fell 1.5 per cent for the retailer compared to two years ago, but the group had expected first quarter sales would be down 10 per cent.

Next saw a two per cent rise in bricks-and-mortar sales compared to this period two years ago, alongside a huge 52 per cent increase in online sales.

The group said last month that it had widened its online customer base by 40 per cent to 8.4m last year with online sales accounting for nearly half of turnover. 

But the retailer predicted that Britain’s current fashion boom will wane alongside the easing of lockdown restrictions, with Next expecting sales to “settle back down to our guidance levels within the next few weeks”.

The group said it had therefore not raised its sales guidance for the rest of the year, which it predicts will be three per cent higher versus two years ago. 

Richard Lim, chief executive of Retail Economics, said: “These are terrific results against an incredibly tough backdrop for the retail sector. Despite mass store closures, the business pivoted its proposition towards home furnishings, its overseas presence and third-party labels, while maximising its online advantage. 

“As expected, apparel remained under significant pressure as lockdown restrictions and the shift towards home working undermined demand for clothing. But as the economy reopens and lockdown restrictions ease, the business is well-positioned to benefit from a considerable amount of pent-up demand.”