Next leads retail’s sunnier outlook with upgrade – Daily Business

Next raised its profit guidance for the second time in two months after shoppers hit the streets in unusually warm spring weather.

The fashion and home furnishings retailer, which recently pushed through the £1 billion profit milestone for the first time, credited the weather for boosting sales, particularly of summer clothing, over the first quarter to 26 April by 11.4%.

On the back of the better figures, the company rasied its annual pre-tax profit guidance by £14 million to £1.08 billion, representing a 6.8% rise on the previous year, and just shy of Shore Capital’s estimate of £1.083bn

However, noting the weather’s impact on the first quarter Next kept its guidance for the rest of the year unchanged, predicting sales growth of 6.5% in Q2 and 3.5% in the second half.

“We believe much of the over-performance in the first quarter has been the result of warmer weather, which has benefited the sale of summer-weight clothing,” said the company.

In March, Next reported annual profits of more than £1 billion for the first time, as shoppers defied reports of a lack of confidence.

Next shares closed up 55p, or 0.45%.

Commenting on the latest UK retail data, Helen Dickinson, chief executive of the British Retail Consortium, said: “A late Easter and some welcome rays of sunshine encouraged shoppers to head out to their local shopping destinations in April.

“Adjusting for the late fall of Easter this year, footfall across March and April showed a small but positive trend, with retail parks continuing to perform the strongest out of all locations.”

Market reaction

John Moore, senior investment manager at RBC Brewin Dolphin, said: “Next continues to shine, buoyed in the first quarter of this year by the good weather.

“It’s another better-than-expected update, underlining the strength and consistency of the business. While the sun might have brought forward sales, Next is in a real sweet spot in terms of its brand offering, the roll out of its hosting format for third parties, and its traditional retail operation.

“We’re reaching the point with Next where anything other than solid momentum and exceeded expectations would be considered a disappointment, but the company continually delivers and shows no signs of stopping any time soon.”