Next sales ahead of expectations as analysts warn ‘worst still to come’
Fashion stalwart Next posted better than expected full price sales while analysts have warned the full impact of market volatility is yet to be seen.
The retailer shared a 0.4 per cent boost to sales in its third quarter versus last year.
The London listed chain reiterated full year guidance for profit before tax of £840m, after delivering a gloomy forecast earlier this year.
It previously slashed guidance after warning of a second cost of living crisis in the later half of its financial year.
While the latest update will come as a “relief” for investors, the performance “masks considerable weekly volatility,” Charlie Huggins, head of equities at Wealth Club, said.
Next’s performance was buoyed by one particularly strong week in September when shoppers headed to shops to stock up on warm clothes due to cold weather. Sales shot up 11 per cent then.
However, in the middle of October sales dropped 3.7 per cent.
“An element of sales volatility is to be expected for any retailer, with weather always playing a part,” Huggins.
“Even so, these are quite large fluctuations and may say something about the fragile state of the economy.”
Next’s share price had lifted by almost two per cent on Wednesday morning.
“Borrowing and spending measures on their own won’t solve the cost of living crisis,” Next chief executive Lord Wolfson told reporters earlier this autumn.
Next said only measures which boost the supply of goods, energy, services and skills would “cure the underlying malaise,” calling on ministers to address supply side problems.
Ministers should consider scrapping “capital projects that deliver little value,” Next said, citing the HS2 rail development in Northern England as “top of our list for review.”
Next had said sales were now expected to contract 1.5 per cent compared to last year, while profits would come in at around £840m, down from an initial forecast of £860m.
It came despite a strong first six months of the year for Next in which profits jumped 16 per cent to £401m on the same period last year as sales rose 12.4 per cent.