Industry reacts to NEXT results: "It's doing everything investors could ask of it in a difficult retail environment"

NEXT has maintained its guidance for the full-year, despite a decline in full-price sales for the first quarter ending 29 April 2023.

The retailer's full price sales dropped 0.7% in the thirteen weeks, which was slightly ahead of its expectation of 2% decline. Bricks-and-mortar sales were down 0.6%, while online sales dropped 1.6%.

To maintain its first half guidance, the retailer has moderated its sales forecast for the second quarter, which is now planned to be down 5% on last year. Its previous guidance was a drop of 4%.

NEXT also said it would maintain its sales and profit guidance for the full-year, with sales expected to decrease 1.5% and profit before tax expected to total £795 million.

TheIndustry.fashion has gathered commentary from experts and analysts to gauge their reaction and gain insight into how the future looks for the high street giant.

Charlie Huggins, Manager of the ‘Quality Shares Portfolio’ at Wealth Club:

"This is another solid update from the bellwether of the UK high street. Sales have fallen by less than expected, and although NEXT hasn't increased its full year guidance, this seems to be borne more out of prudence than anything else.

"The current retail environment is sorting the wheat from the chaff. On the one hand you have the likes of Superdry, Boohoo and ASOS which are really struggling, not to mention countless other retailers that have gone bankrupt. At the other end of the spectrum are the likes of NEXT and Primark, which appear to be getting stronger.

"NEXT's strength is allowing it to snap up weaker rival's brands (like Made.com) at knock-down prices and plug them into its online distribution network. By offering these brands, NEXT expands choice for customers and gives them even more reasons to keep coming back.

"Overall, NEXT is doing everything investors could ask of it in a difficult retail environment. Economic pressures could yet worsen as higher interest rates really start to bite. But that won't worry NEXT too much. It looks to be in a much stronger position than rivals to weather any storm."

Wes Wilkes, CEO at Net-Worth Ntwrk:

"NEXT, like many businesses on the high street, understandably has a few nerves given current market conditions. It is cautious about the second quarter as it is concerned about its ability to repeat the stellar revenue generated in the same period in 2022, which was buoyed by warm weather and pent-up demand for weddings and other pandemic-deferred events.

"A more muted year-on-year second quarter is expected with a moderated forecast for lower growth, due to the headwinds facing the high street caused by stubbornly high inflation and rising interest rates."

Samuel Mather-Holgate of Mather & Murray Financial: 

"Retail customers were driving a hard bargain, with NEXT having to discount heavily during this period especially compared to last year.

"Even with these discounts, NEXT had to rely on more profitable consumer finance products to hold up weak sales data. This isn’t unexpected, but is yet more evidence that the economy is fragile. There's a real chance that that one more Bank of England base rate rise could break it and hit the high street hard."