Next sticks to outlook as sales nudge up despite shoppers tightening purse strings: reaction
High street stalwart Next has revealed that sales for the past quarter grew slightly ahead of expectations despite growing pressures on consumer budgets.
The retail giant reported that full-price sales were up 0.4 per cent over the 13 weeks to October 29, compared with the same period last year. This included a bounce from sales at the group’s UK and Ireland retail stores, which grew 3.1 per cent over the quarter. This offset a 1.9 per cent dip in online sales, which failed to keep up with elevated levels boosted by the pandemic last year. Next told investors it saw improved sales growth in September and October.
In a trading update, the company said: “Full-price sales in the last five weeks have been up 1.4 per cent, boosted by one particularly strong week at the end of September, when temperatures dropped and sales of heavier weight products improved.”
The business said in its previous update that it “seems inevitable” that growth in the clothing and homeware sector “will slow if not reverse” as inflation and rising energy and housing costs begin to bite. Prices across the retailer’s autumn and winter range have been increased by 8 per cent as it passes on some of the impact of higher costs to customers. In its latest update, Next also reaffirmed that it expects to hit its pre-tax profit target of £840 million for the current financial year.
Matt Britzman, equity analyst at investment platform Hargreaves Lansdown, said: “Broadly speaking, Next has had a decent third quarter, though cost-of-living headwinds are still mounting for the retailer. Although the headline points to sales growth, if interest income is stripped out underlying sales saw a small decline.”
Richard Hunter, head of markets at Interactive Investor, noted: “Fortunately, there are no further shocks in a brief trading update which reveals marginal growth in the period. Full-price sales are a central feature of the release, where Next has attempted to maintain prices for the sake of both margin and profits. For a mid-range retailer this runs the risk of losing customers to cheaper rivals, although the group has previously maintained that the general growth trend has been protected, albeit at a lower rate.”