Next leads FTSE 100 as it ups profit forecast after sales boost
High street retailer Next announced this morning it expects to make more profit this year than previously forecast after a boost in full price sales.
Shares in the company rose more than seven per cent this morning as it increased its full year profit guidance by £10m to £725m, a boost of 0.3 per cent on last year.
Read more: Shop prices fall as retailers tempt customers with discounts
Next said full price sales in the second quarter were up four per cent on last year, and increased its full-year guidance to 3.6 per cent from 1.7 per cent.
The increase in full price sales guidance amounts to £70m and is expected to add £20m in profit.
However, discounted items in the firm’s latest end-of-season sale have been less popular than anticipated and the amount of stock sold is two per cent lower than expected.
The decline in discounted sales is expected to cost an additional £10m.
Read more: Retail sales decline for longest stretch in eight years
“Last season’s unwanted stock is proving to be a drag on fashion retailer Next’s bottom line. With surplus stock sitting around the retailer has been forced to pin back its full-year profits forecast,” said Emma-Lou Montgomery, Fidelity Personal Investing associate director.
She added: “The retailer said this unsold stock will cost it some £10 million and keep full-year profits in check, leaving them only marginally better than last year.”