Next sales online jump in the last quarter leaving the high street giant on track for £1 billion of profits next year, a level few UK retailers have ever matched.
Sales were up 5.7% in the quarter to April 27 and it expects profits this year of £960m.
Next offered a typical warning about the near future:
“We expect the sales performance in the second quarter to be weaker than the first quarter because last year benefited from particularly warm weather from late May through to the end of June,” it said in a statement to the City.
Online sales rose 8.8% while in-store sales were flat. That was better than the market was expecting, the seventh time in a row when Next has topped market expectations.
Chief executive Simon Wolfson said recently that he was more positive about consumer sentiment than he has been for years.
He said in March: “If you look at where we are today, compared to any of the last seven years, the headwinds are just not nearly as strong,”
Next, along with arch rival Marks & Spencer has dominated the mid-market for retail, ,a space where others such as Ted Baker and Superdry have struggled to stay alive.
Next has been a strong acquirer of other brands, picking up Fatface and Reiss in recent years.
It does the back office work for those firms while maintaining their brands on the high street.
Next calls this system “Total Platform”.
Wolfson said earlier: “Total Platform gives us a unique opportunity to have lots of different brands, but we are very strict about not saying who we are talking to and who we are not.”
Adam Vettese, analyst at eToro says: “Next seems to be the gift that keeps on giving as they deliver an increase in sales for Q1 that has come in ahead of expectations. They have been cautious about raising the full-year outlook due to a particularly warm Q2 last year and as a result anticipate a potential dip upcoming in comparison. Whilst the macro outlook has certainly improved, there may be some risk factors for retailers, as some uncertainty lingers, but it is still fair to say that Next is a pick of the sector. Despite a slight dip in the share price this morning which could well be a bit of profit taking, there is still scope for the price to push on this year.”
Next shares dipped 58p to 8950p today as some investors opted to take profits. The shares are up 36% in the last year and 57% over the last five.
Guy Lawson-Johns, equity analyst, Hargreaves Lansdown said: Next’s significant work to enhance its online service is paying dividends. Improved stock availability and seamless operational execution are driving performance beyond anticipated levels. Where question marks remain is whether delivering expected results will soon be good enough. Next has made a habit of under promising and over delivering to investors. While this often makes for good reading, it means markets have grown to expect more.”
