Next sales boosted by warm weather – and the FTSE 100 listed retailer has seen its share price rise 24% in the past year
Next sales boosted by warm weather – and the FTSE 100-listed retailer has seen its share price rise 24% in the past year
- Total sales increased by 5.4%, boosted by the warm weather at the end of May and June
- Pre-tax profits rose 4.8% to £420 million in the six months to July
Retailer Next says sales have been better than expected, with the business showing a boost from the warm weather.
It showed pre-tax profits rose 4.8 per cent to £420 million in the six months to July, compared to the same period last year.
The FTSE 100 company also saw total sales rise 5.4 percent, with exceptionally warm weather in late May and June boosting sales of its summer clothing at a critical time, the group said.
Following the results, the retailer has raised its full-year profit forecast for the third time, from £845m to £875m.
The fashion retailer announced that its pre-tax profits rose 4.8% to £420 million in the six months to July, compared to the same period last year
Richard Hunter, head of markets at Interactive Investor, said: ‘Next has long been regarded as a well-oiled machine and clearly has the determination to make progress.
“The combination of lower costs and an online offering that continues to thrive will support financial performance and bode well for the future development of the offering as a whole.
‘The shares have recently seen the benefit of rising expectations as they are up 24 per cent over the past year, compared with a 6.8 per cent gain for the broader FTSE 100.’
Next also said it underestimated the impact that slowly rising wages and a strong labor market would have on its revenue.
Average wage growth has been outpaced by price rises in Britain in recent years, but has been overtaken by inflation in the three months to July, according to official figures.
Earlier this month, the group announced that it had joined forces with the Reiss family to acquire a significant stake in the Reiss Group.
The two parties have agreed to spend £128 million to buy a 34 percent stake in the luxury clothing chain – which also includes the Duchess of Cambridge – from US private equity giant Warburg Pincus.
Upon completion of the deal, Next will have increased its stake in Reiss Group from 51 percent to 72 percent, while the Reiss family will own a 22 percent stake and the remainder will be owned by Reiss management.
Hunter added: ‘However, the two-year performance remains negative, with the shares still down 12 per cent and a long way from the peak of £81 reached in November 2021.
‘Nonetheless, Next has once again demonstrated its credibility for existing and future growth, and the market consensus on the stock as a strong position could be subject to some upward revision.’
Next expects prices to rise by about 2 percent in the fall and winter season, lower than the 3 percent increase previously forecast, before potentially leveling off in spring next year.
It comes at a time when inflationary pressures continue to ease for the group, with costs such as labor, manufacturing and shipping falling faster than expected.
Next shares rose 2.3 percent to 7,270p in morning trading on Thursday.
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