Next has reiterated its annual guidance after the retailer’s sales surpassed forecasts in the first quarter.
The fashion and homewares brand reported full-price sales increased by 5.7 per cent for the 13 weeks ending April 27, compared to an anticipated 5 per cent increase.
Trading was driven by online revenue growth of 8.8 per cent, which compensated for flatlining store orders, as well as a 6.4 per cent gain in finance interest income.
Strong performance: Next reported full-price sales increased by 5.7% for the 13 weeks ending April 27, compared to an anticipated 5% increase
Consequently, the company predicts full-price turnover will rise by 2.5 per cent to £4.9billion this financial year, supported by a solid performance over the final six months of the period.
It did forecast a slight decline in second-quarter revenues, having benefited from ‘particularly warm weather’ in late May and June last year.
It predicted that total turnover would expand by 6 per cent, partly reflecting the stakes Next bought in FatFace and luxury fashion brand Reiss Group.
Next recently acquired FatFace in a £115million deal and boosted its holding in Reiss – whose fans include the Duchess of Cambridge – from just over half to 72 per cent.
Despite the current subdued macroeconomic backdrop, Next is projecting a robust growth trajectory.
The FTSE 100 firm anticipates its annual pre-tax profits increasing by 4.6 per cent from £918million last year to a record £960million in 2025.
In March, Next said earnings gains would largely come from a 2.5 per cent hike in full-price sales, more normalised employee incentives, and profit from its Total Platform service.
Total Platform grants third-party brands access to the retailer’s online marketing, logistics, warehousing and other infrastructure.
Among the brands using the service include Victoria’s Secret, JoJo Maman Bebe, Joules, Made.com, Laura Ashley, and American clothing seller Gap.
John Moore, senior investment manager at RBC Brewin Dolphin, said: ‘The company is in a sweet spot where it is carefully growing its branded goods proposition while continuing to upscale the core business.
‘With relatively modest competition and easing inflation, tailwinds for the company appear to be favourable.
‘The British weather seems to be the only thing that could stop Next – spring hasn’t yet sprung in 2024.’
Next shares were 0.7 per cent lower at £89.46 on Wednesday morning, but have still climbed by around 36 per cent over the past 12 months.
The London-based firm, founded in Leeds 160 years ago, is the UK’s biggest clothing seller by sales and has enjoyed significant expansion since Covid-related restrictions were loosened while e-commerce brands like Asos and Boohoo have struggled.
