Next Plc said first quarter sales were solid as easing price pressures boost shoppers’ desire to buy clothes and shoes.
The British fashion and homewares company said Wednesday that full price sales climbed 5.7 percent in the first quarter, which was slightly ahead of an expected 5 percent rise.
However, Next stuck with its outlook — that it will generate £960 million ($1.2 billion) of pretax profit with group sales rising 6 percent this fiscal year — pointing to a likely weaker second quarter affected by colder-than-expected weather.
Shares of Next fell 2 percent in early trading in London. The stock is up more than 30 percent in the past year.
Next has hundreds of UK stores and a large online operation and its performance is closely watched as an indicator of broader retail conditions. Chief executive officer Simon Wolfson is known for his bearish forecasts and usually beats expectations, such that the retailer raised its outlook five times last year as demand grew.
“The Next of old may have been a greater hostage to the unhelpful weather conditions that have emerged in the UK in recent weeks, but the first quarter progress should please,” James Grzinic, an equity analyst at Jefferies, wrote in a note to clients.
While comparatives were soft in the period, “this is a solid result given weather has, once again, been unseasonably cold throughout April,” said Ben Hunt and Kate Calvert, analysts at Investec.
Since the start of the year, inflation has been easing in Britain prompting more demand from shoppers. Clothing and footwear prices slid into deflation for the first time since January 2022 at the start of April as retailers sought to entice customers with promotions, according to the British Retail Consortium. That’s helping to boost consumer confidence.
However, the recent cold weather is not helping and Next said it expects sales to decline by 0.3 percent in the second quarter now as last year’s warm weather makes for a tougher comparable period.
By Jennifer Creery
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