British fashion retailer Next on Monday raised its sales and profit guidance for the year, saying trading had exceeded expectations on the back of warmer weather and a wages boost for consumers, sending its shares higher.
Next, which trades from about 500 stores and online and is considered a barometer of how British consumers are faring, said full price sales in the first seven weeks of its fiscal second quarter were up 9.3 percent versus the previous year — ahead of guidance for a fall of 5 percent.
The group said it had beaten its full price sales estimates by £93 million ($119 million) in the period.
Shares in Next were up 4.5 percent in afternoon trading, while shares in Primark owner AB Foods, were up 2.2 percent.
Next said the onset of warmer weather in Britain had made a significant difference to its performance, particularly coming after a wet and cold April.
Trading was also boosted by an uplift in consumers’ real income from annual salary increases in April.
“We do not think it is a coincidence that sales stepped forward so markedly at a time of year when many organisations make their annual pay awards,” the retailer said.
But Next cautioned against extrapolating the current performance for the balance of its 2023-24 year.
“If recent pay rises and the sudden change in weather have indeed contributed to the current over-performance, then it is reasonable to expect that the effect will diminish over time because ongoing inflation will slowly erode the positive effect of annual pay increases,” it said.
Next upgraded its full price sales guidance for the year by £137 million and its profit guidance by £40 million to £835 million, down from the £870.4 million made in 2022-23.
By James Davey and Radhika Anilkumar; Editor: Dhanya Ann Thoppil and Kylie MacLellan, Kirsten Donovan
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