The long hot summer has helped Next Plc shift more stock than it anticipated.
The high street chain said it had over-performed through the past three months thanks to the unusually warm and dry weather. It was also helped by people spending more on formal clothes now that lockdown restrictions had lifted, thought to be driven by pent-up demand for social events such as weddings.
The business said high street and out of town store sales were up almost 5 per cent over the summer despite ONS statistics suggesting people were spending 6 per cent less on clothes than they were before the pandemic.
Return rates of online purchases were back at pre-pandemic levels though, at 42 per cent – compared to around 30 per cent during Covid.
In a positive trading update, Next said sales for the first half of 2022 showed a sharp reversal of last year's lockdown trends. In-store sales, it said, had recovered, while online growth – which took off when people were stuck indoors during the pandemic – appeared to have gone back to a more long-term trajectory.
The £5 billion turnover business – which is headquartered just outside Leicester – said many shopping trends had also returned to pre-pandemic norms. It said “lockdown winners”, such as home and sportswear, retreated while formalwear returned to favour.
On the back of all that the business expected profits for the full year to be ahead of expectations at around £860 million – 4.5 per cent up on last year. The share price was up almost 3 per cent following the announcement at £69.28.
There was, however, a warning that the strong sales were expected to start slipping in the second half of the year as the warm weather subsides and the impact of soaring inflation on consumer spending worsens.
The trading statement said: “At first sight, our full price sales performance against last year suggests that growth online has ground to a halt and that retail is having something of a renaissance.
“This is certainly the case on a one year basis. But we think that these changes reflect a short-term reversal of pandemic trends, and are unlikely to be indicative of longer term trends in consumer behaviour.
“Last year, our stores were closed for most of the first quarter. Even when they reopened we believe that many customers remained wary of visiting shops. During this time we think online shopping was inflated by at least as much as retail sales were depressed.”
The business said in-store sales for the past three months were up almost 5 per cent against pre-pandemic levels –far better than expected and potentially due to the loss of big high street competitors such as Debenhams, Burtons, Dorothy Perkins and Topshop.
It said: “We had planned that our stores would be down against 2019, following the long-run of negative like-for-like retail sales we have experienced since 2016.
“We suspect that the apparent improvement in the fortunes of our stores is, to some extent, down to the number of competing stores that have closed in the last three years.
“This is supported by ONS industry statistics for February to June which suggest that the total money spent on clothing in all UK retail stores is down – 6 per cent compared to three years ago.”
