Next share price up as it thanks sunny spells for raised profit guidance
Next share price increased over four per cent this afternoon as the retailer raised its sales and profit guidance.
The high-street favourite made the surprise announcement after it was bolstered by the arrival of warm weather – but warned that it does not expect the momentum to continue for the rest of the year.
In an unscheduled trading update, the high street retailer said it was lifting its full price sales guidance for the full year by £137m and its full year profit guidance by £40m to £835m.
The London-listed company told investors that it had been trading “marginally better” than it predicted this quarter with full price sales up 9.3 per cent in the seven weeks to the second quarter, compared with a previously anticipated five per cent decline.
However, the retailer still remained cautious about inflation and the impact it is having on consumer spending, and public wages.
“During April annual inflation was running at 8.7 per cent and monthly inflation was 1.2 per cent; if an individual received a pay rise of 5.0 per cent , then their real income would have risen by 3.8 per cent in that month.” Next said.
“We do not think it is a coincidence that sales stepped forward so markedly at a time of year when many organisations make their annual pay awards.”
“This is why we are not anticipating the current performance to continue at the same level going forward, albeit we have moderately improved our guidance for the rest of the year,” it added.
“A Next update would not be complete without a note of caution, and the group added that if its current reading of the improvement in sales is correct, then the effect will diminish over time as ongoing inflation continues to bite,” Richard Hunter, Head of Markets at interactive investor, said.
He added: “Even so, the update saw the shares spike by up to 5 per cent , building on a hike of 15 per cent over the last six months. The performance over the last year has been more in line with the wider market, with a rise of 7 per cent comparing with a jump of 8 per cent for the FTSE100.”