Next has upgraded annual profit expectations for the fourth time in five months after the arrival of cooler weather in late October helped bolster sales.
The retailer said it now expected to make £10m more profit than previously forecast, taking its full-year target to £885m, after full-price sales rose by 4% in the three months to the end of October – double the pace of growth anticipated.
Sales were down year on year in September because warm weather put shoppers off buying coats and knitwear but Next said sales rose by more than 11% in the second half of October as temperatures cooled – compared with a less autumnal spell a year ago.
“Sales growth has been variable,” the company said. “We believe the volatility in sales performance is a result of changing weather conditions rather than any underlying changes in the consumer economy. In an autumn season, cooler weather is good for sales, warmer than average weather depresses sales.”
Shares in the group rose by more than 3% on Wednesday morning after it said sales for the full year were now expected to increase by 3.1% to £4.7bn, up from a 2.6% rise previously pencilled in.
Next has gradually ratcheted up profit expectations as it has achieved strong growth online, helped by the ability of shoppers to pick up and drop off items for free at its physical stores, while digital-only rivals such as Asos and Boohoo have suffered.
The retailer’s network of stores and wide variety of brands – from Gap and Victoria’s Secret to Reiss – has helped bring in new shoppers amid concerns about the costs of delivery and returns during a big squeeze in living standards.
The Next chief executive, Simon Wolfson, has said that introducing new designs more frequently and adding more items at the middle and top end of its price range have helped the company appeal to a broader audience.
Next is in the process of acquiring the casual clothing chain FatFace, cementing its position as Britain’s most-prolific buyer of high street retail brands, having snapped up Cath Kidston, Made.com and JoJo Maman Bébé since the height of the Covid pandemic.
Wolfson has said he is aware of the risks of Next becoming a “corporate blob” in which brands began to look the same, and so the group is determined to keep design, suppliers and offices separate despite pressure to cut costs.
