Next enjoyed better-than-expected spring sales as the UK basked in unusually warm weather, raising hopes of a strong season for fashion retailers after many had a difficult autumn and winter.
The retailer, which recently surpassed £1bn in profit for the first time, continued its winning streak on Thursday as it reported that full-price sales rose by 11.4% in the 13 weeks to 26 April, compared with the same period last year. Revenue was £55m higher than initially expected.
It said warmer weather had “benefited the sale of summer-weight clothing”.
The company expects annual pre-tax profits to end its current financial year at £1.08bn, representing a 6% rise compared with last year. While the first quarter had been stronger than expected, the company said this “over-performance” might have been pulled forward from the second quarter.
John Stevenson, a retail analyst at Peel Hunt, said the warm weather in April had “turbocharged performance at Next” and that “the whole sector should be benefiting from a positive weather effect”. He suggested other retailers selling seasonal products were also likely to have benefited.
Shares in Next, a member of the blue-chip FTSE 100 index, have risen by more than 28% so far this year, thanks to a huge expansion overseas and its sales of other brands. Next shares were up 0.5% on Thursday afternoon.
Shares in the fashion retailer JD Sports, the B&Q owner, Kingfisher, and the bicycle and car parts retailer Halfords all rose on Thursday amid hopes of better-than-expected sales despite fears about the economy.
John Moore, at the wealth manager RBC Brewin Dolphin, said the quarterly figures underlined Next’s strength.
“While the sun might have brought forward sales, Next is in a real sweet spot in terms of its brand offering, the rollout of its hosting format for third parties and its traditional retail operation,” he said.
The retailer, which is led by the Conservative peer Simon Wolfson, has not reported any cyber incidents that have hit other big players in the British retail sector, including its rival Marks & Spencer, as well as the luxury department store Harrods and Co-op.
Analysts at Jefferies investment bank said Next could take some market share while online shopping at M&S remained disrupted. Next’s online sales in the UK rose by 9% in its first quarter, which did not include the period of disruption at M&S.
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The retailer was created in 1982 when the men’s tailoring brand Hepworths bought the womenswear chain Kendall & Sons.
Next is one of the biggest online fashion businesses in the world, having bought stakes in brands such as Gap, Victoria’s Secret and FatFace. Next is only the fourth British retailer to pass the £1bn profit milestone.
The retailer predicts slower revenue growth in the second half of its financial year, especially because its sales in the autumn and winter seasons last year were strong. It forecasts 6% total sales growth for the full year.
