Next upgrades profit forecast, boosted by sunshine and online sales

Retail giant Next has hiked its profit outlook and bolstered sales after an unusual spell of sunny weather spurred demand for T-shirts and picnic sets.
The high street bellwether said the better than expected ?40m of sales in the first quarter added ?12m to its full-year profit, prompting the firm to raise its guidance for full year profit to ?717m from ?705m. That represents a 1.3pc fall from the prior year, compared with a previously expected 2.9pc drop.
Next’s sales of full-price items in the 14 weeks to May 7 were up 6pc on last year and it expects a 1pc rise in those sales for the rest of the year compared to the year before. It is anticipating a 2.2pc total sales increase for the full year to Jan 26, 2019.
Shares in Next were up 6.1pc at ?55.66 in early trade and the retailer was the biggest riser in the FTSE 100 index.
Chief executive Lord Simon Wolfson said freak bout of warm weather had lifted sales “across the board”.
Next share price
He said: “All the summer style products, it didn’t matter which area it was in. The warm weather products have all done well. Everything from T-shirts to picnic sets."
The retail boss added: “We have reported sales being 6pc up. In terms of quantifying how much effect the weather had on sales, we think that the weather accounted for between 2pc and 3pc of it.”
Online sales were particularly strong, up 18.1pc, helping to offset a downward trend in store sales, which fell 4.8pc.
The retailer said its estimates for the year may look “overly conservative”, but when comparing the data to two years earlier, the forecast was more realistic. It said the sales forecast for the rest of the year would represent a 3.3pc increase on two years ago.
Nicholas Hyett, a Hargreaves Lansdown analyst, said Next’s willingness to "say it as it is" had left them feeling cheery about the retailer’s future. 
He said: “Few retailers would go to the lengths Next has to play down what are undoubtedly strong results, especially when UK retailers are facing such a tough environment.
“But there’s method in the madness. If, as Next seems to believe, the strong first quarter reflects shoppers pulling forward their summer purchases to take advantage of the recent warm weather, then Q1’s positive results will come largely at the expense of later quarters.”
Next said it had returned ?195m to shareholders as part of a ?300m share buyback announced in January, with the remainder to be returned over the rest of the year.
Next upgrades profit forecast, boosted by sunshine and online sales

Next saw sales boosted by the recent bout of warm weather
In March the firm said it planned  to squeeze its landlords for rent reductions and shorter-term leases in a push to keep its stores in the black after posting an 8.1pc drop in annual profits to ?726m following what Lord Wolfson described as its “most challenging year” in 25 years.
Richard Lim, chief executive of Retail Economics, said the “continuous structural challenges” facing retailers underpin Next’s latest trading update.
“In-store sales continued to spiral downwards indicating the relentless shift towards online shopping," he said.
“This reflects the real challenge for many high street retailers who are oversupplied with physical space while consumers increasingly spend both their time and money away from traditional high streets."
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