Next achieves better than expected Q2 full-price sales growth
Next has reported a 4% increase in full-price sales in Q2 and the better than expected performance has led it to up its guidance for the year.
The barometer fashion and lifestyle retailer achieved full-price sales growth of 3.8% in May, 2% in June and 6.8% in July. This performance was 4.5% better than the guidance of -0.5% given in the company's May trading statement.
Next said that some of July's over-performance was down to lower markdowns in its end of season Sale and so it was using the average growth for May and June of 3% to set its guidance for the second quarter.
Its full year full price sales guidance increased from +1.7% to +3.6% while full-year profits guidance is now increased by £10m to £725m (up 0.3%) on last year.
"The increase in our full price sales guidance is £70m and, after accounting for associated costs, is expected to add £20m to profit. Lower clearance rates to date, along with anticipated lower clearance rates in the second half, are forecast to cost an additional £10m.
"As a result, we are increasing our guidance for full year Group profit by £10m to £725m, marginally up on last year. We now expect Earnings Per Share to grow by +5.2%," the trading statement said.
Although sales in shops were down 3.9% in the first half, the rate of decline was slower than last year and online growth continued to be in the double-digits at 11.9%.
The market responded positively to the news, with analysts at Shore Capital commenting: “Next remains a well-managed company with tight stock and cost controls.
“These are good results despite relatively tough comparatives and there are few retailers with upwards momentum in guidance, despite the uncertain outlook in terms of consumer sentiment.”
The company said it had nearly completed a share buy-back programme to return £300m to shareholders. Around £280m of shares had already been bought back.