Wolfson does it again? Next beats revenue expectations despite recession fears
Next remained confident in front of investors this morning with better than expected sales in the first three months of the year, with its share price rising 0.80 per cent when markets opened.
In a first quarter trading update, the London-listed retailer said that full price sales were down 0.7 per cent versus last year, but remained ahead of its guidance for this period, which was expected to be down -2 per cent – as the brand benefited from more stock availability during its spring sales.
The better than expected quarter means the ever-prudent Next has suggested sales will fall by 5 per cent year on year in Q2, described as an “adjustment” to maintain the overall first half guidance.
As consumers tightened on spending after Christmas, Next also reported a -1.6 per cent loss in online sales and a 0.6 per cent decrease in retail sales.
Looking ahead, Next predicted full year sales for 2023/24 period to trade 18.7 per cent ahead of pandemic levels, however 1.5 per cent less than last year.
The retailer, which has recently snapped up brand such as Joules and Made.com, also said it was maintaining its sales and profit guidance for the full year, with profit before tax forecast to be £795m – down 8.7 per cent on last year.
“To maintain our first half forecast, we have moderated our sales forecast for the second quarter, which is now planned to be -5 per cent down on last year (previous guidance was -4 per cent),” Next said in an update this morning.
They continued: “This adjustment seems reasonable, as some of the first quarter’s success, particularly in holiday clothing sales leading up to Easter, might have been pulled forward from the second quarter.”
Charlie Huggins, manager of the ‘Quality Shares Portfolio’ at Wealth Club, said: “Next’s strength is allowing it to snap up weaker rival’s brands (like Made.com) at knock-down prices and plug them into its online distribution network. By offering these brands, Next expands choice for customers and gives them even more reasons to keep coming back.
“Overall, Next is doing everything investors could ask of it in a difficult retail environment. Economic pressures could yet worsen as higher interest rates really start to bite. But that won’t worry Next too much. It looks to be in a much stronger position than rivals to weather any storm,” He added.