Next, the popular clothing and homeware retailer, has raised its sales and profit forecasts for the full year and expects strong growth ahead. This positive news has resulted in Next being one of the few FTSE 100 risers on Thursday.
According to Next, full-price sales increased by 6.9% during the three months leading up to July, with corresponding revenues up 3.7% since the previous trading statement in June. These figures exceeded Next’s own expectations, which had anticipated a 0.5% increase since the last update.
Online sales were a major contributor to Next’s growth, rising by 10% between May and July. This boosted overall sales growth for the first half by 4.1%. In-store sales also saw a modest increase of 2.2%, leading to a 0.9% growth in physical sales for the first half of the year.
Next also reported positive news regarding its clearance rates, stating that they were ahead of last year and the company’s internal forecasts. These end-of-season sales have already contributed around £4 million to Next’s pre-tax profits, highlighting the effectiveness of their sales strategies.
Following their recent strong trading performance, Next is now revising its full-price sales guidance for the full financial year until January 2024. They anticipate that profits will reach £4.68 billion, up from the previous estimate of £4.67 billion. This represents a 1.8% increase from the previous year. Additionally, Next has raised its pre-tax profit forecasts by £10 million to £845 million. This adjustment indicates a smaller decline of 2.9% year-on-year compared to the previously predicted 4.1% decline.
This recent update from Next comes after a series of impressive updates from the company. In mid-June, Next announced a 9.3% year-on-year rise in full-price sales during the first weeks of the new financial year. The unusually warm weather during that period was cited as a key driver of their strong performance.
Charlie Huggins, head of equities at Wealth Club, acknowledged Next’s positive first-half performance but urged caution, noting Next’s prediction of broadly flat sales in the second half of the year. Huggins surmises that while this caution may reflect the company’s conservatism, higher interest rates could present challenges for Next in the latter part of the year.
In conclusion, Next’s upward revision of sales and profit forecasts, along with their solid trading performance, has reinforced the company’s positive outlook for the future. By capitalizing on online sales growth, implementing effective sales strategies, and reacting to market conditions, Next has positioned itself for continued success moving forward.
