FatFace and Reiss are encouraging shopping at Next as it shows strong online sales
- The following reported full-price sales increased 5.7% for the 13 weeks ended April 27
- The fashion brand’s trading was driven by an 8.8% increase in online revenue
Next has reiterated its annual guidance after the retailer’s first-quarter sales exceeded expectations.
The fashion and homewares brand reported that full-price sales rose 5.7 percent for the 13 weeks ending April 27, compared with an expected 5 percent increase.
Trading was driven by 8.8 percent growth in online sales, which offset flattening store orders, as well as a 6.4 percent increase in financial interest income.
Strong performance: Next reported full-price sales rose 5.7% for the 13 weeks ended April 27, compared to an expected 5% increase
The company therefore forecasts full-price sales to rise 2.5 percent to £4.9 billion this financial year, supported by solid performance in the final six months of the period.
The company did predict a slight decline in sales for the second quarter, after benefiting from ‘particularly warm weather’ at the end of May and June last year.
It forecast total sales would rise 6 percent, partly due to the stakes Next bought in FatFace and luxury fashion brand Reiss Group.
Next recently acquired FatFace in a £115m deal, increasing its stake in Reiss – whose fans include the Duchess of Cambridge – from just over half to 72 per cent.
Despite the current subdued macroeconomic conditions, Next predicts a robust growth trajectory.
The FTSE 100 company expects its annual pre-tax profit to rise 4.6 percent, from £918 million last year to a record £960 million in 2025.
In March, Next said the profit increases would largely come from a 2.5 percent increase in full retail price, more normalized employee incentives and profits from its Total Platform service.
Total Platform grants third-party brands access to the retailer’s online marketing, logistics, warehousing and other infrastructure.
Brands using the service include Victoria’s Secret, JoJo Maman Bebe, Joules, Made.com, Laura Ashley and US clothing retailer Gap.
John Moore, senior investment manager at RBC Brewin Dolphin, said: ‘The company is in a good place where it is carefully expanding its branded merchandise proposition while continuing to scale up its core business.
‘With relatively modest competition and declining inflation, the tailwinds appear to be favorable for the company.
‘The British weather seems to be the only thing holding Next back – spring hasn’t sprung yet in 2024.’
Next shares were 0.7 per cent lower at £89.46 on Wednesday morning, but are still up around 36 per cent over the past 12 months.
The London-based company, founded in Leeds 160 years ago, is the UK’s largest clothing retailer by sales and has seen significant expansion since Covid-related restrictions were eased as e-commerce brands such as Asos and Boohoo struggled.