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Next: Retail giant does it again with further profit guidance upgrade

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What's Next: Retailer seeking appeal but does it stand a chance?
What's Next: Retailer seeking appeal but does it stand a chance?

Next, the retail bellwether, has upgraded its profit guidance for the year – despite a bruising wider economic environment.

Second quarter full-price sales were up 6.9 per cent year on year, with the warm weather in June driving punters through the door, the retailer confirmed in an update to markets this morning.

One analyst said the upgrade and trading update were “better than expected,” with the firm now expecting profit of £645m on the year – a £10m bump on its last guidance.

Online sales rose 10 per cent year on year.

Next, which is also known for snapping up struggling brands such as Made.com, said its stock levels have been well controlled with surplus stock down -22 per cent versus last year.  

Clearance rates, to date, are ahead of last year and ahead of its internal forecasts, which added around £4m to Group profit before tax. 

This is the second time the retailer has raised its profit guidance for the year. 

In an unscheduled trading update, in June, the high street retailer said it was lifting its full year profit guidance by £40m to £835m.

For the year, Next also said it expects full price sales to rise 1.9 per cent to  £4.68bn compared to £4.67bn. 

It comes ahead of its interim results which are set to be published in September.

The group’s share price rose 0.41 per cent this morning following the news.

Charlie Huggins, manager of the quality share sportfolio at Wealth Club, said: “despite this excellent first half performance, Next remains cautious and is expecting sales to be broadly flat in the second half, a material slowdown. This probably reflects a degree of conservatism from the group. It also likely reflects the recent rapid increase in interest rates which could be set to bite harder in the second half, sapping consumer confidence.

“So far, 2023 has not been anywhere near as bad as expected for the UK consumer, and this has benefitted Next and its peers. The big question is – how much longer can this last? Recent signs that inflation is moderating offers hope for the economy, but the longer interest rates stay above 5% the greater the likely squeeze on disposable incomes.”