NEXT sales boosted by warm weather and wage growth as price rises set to fall

NEXT has bumped up its profit expectations for the third time this year after seeing sales boosted by warm weather and rising wages.

The retailer said it expects to put up its prices by less than expected over the rest of the year as its business costs come down.

It reported a better-than-expected 5.4% jump in total sales over the six months to July 2023, compared with the same period last year, and a 3.2% increase in sales of its brands at full price.

Its pre-tax profit improved by 4.8% to £420 million over the same period.

NEXT said it underestimated the impact that slowly rising wages and a strong employment market would give its sales.

Average wage growth has been outstripped by price hikes in the UK over recent years but caught up with inflation in the three months to July, according to official figures.

The retailer also said that exceptionally warm weather in late May and June is likely to have boosted sales of its summer clothing at a critical time.

But the volume of sales reduced as prices shot up by 7% over the period, meaning that customers spent a similar amount of money on clothing but got fewer items in their basket.

NEXT said it expects prices to rise by about 2% over the autumn and winter season, lower than the 3% increase it had previously forecast, before potentially flattening in the spring of next year.

It comes as inflationary pressures continue to ease for the group, with costs such as labour, production and shipping falling faster than expected.

The group lifted its profit guidance for the full year from £845 million to £875 million and forecast a further slowdown in inflation over the next financial year.