Next's share price edged slightly higher by more than three per cent this morning, after the company reported batter-than-expected sales in the past three months thanks to temperate winter and spring weather.
Full price sales rose 3.2 per cent in the period, beating the zero to three per cent rise the company itself forecast last month.
The clothing retailer cited warm weather and the earlier launch of its new summer line for the better-than-expected sales, which are now 4.1 per cent ahead of the same period last year.
The company's biggest growth came from its online home shopping system Next Directory, with a seven per cent rise in sales contrasting to a 0.5 per cent rise at the retail division.
However, despite the pleasantly surprising sales, Next has left its full-year profit forecast unchanged at between £785m and £835m. Total shareholder returns are forecast to fall between £835m. Total shareholder returns are forecast to fall between 5.8 per cent and 12.1 per cent.
Why it's interesting
Next's latest results will spark a return of investor confidence after a warning of slower sales growth triggered a sell-off in March. Last month's fall in the retailer's stock could well be just a blip – Next's share price has risen 9.8 per cent in the past year.
While UK the high street has appeared to be in good health with retail sales on the rise, Next is outperforming direct rivals such as Marks and Spencer which has reported 14 consecutive quarters of falling sales.
Ketan Patel, senior investment analyst at Ecclesiastical Investment Management, commented: "Next continues to develop its fundamental strengths in a highly competitive and dynamic market by investing in product quality, its store network and the Directory offer. The company had highlighted a cautious outlook in March when it reported FY 15 results, however, since then the UK weather has improved noticeably, which has had a positive impact on sales."
What Next said
…sales in the first quarter were flattered by the earlier launch of our summer "New-In" brochure, which helpfully coincided with much warmer weather. We estimate this timing effect increased our reported number by around +0.6%[sic].
The UK high street is healthy, with Next's prior predictions of slower sales growth proving to be a modest claim in the first quarter of the year.