Next raises profit guidance again as summer sales boom

Next Plc raised its guidance for the second time in recent months after wet weather and ongoing inflation failed to deter shoppers from buying fashion.
 

Full price sales in the second quarter rose nearly 7% on last year, according to the company’s earnings report on 3 August. That has driven Next to increase its forecast for profit before tax by £10 million ($12.7 million) to £845 million this year.

The UK clothing retailer already raised its guidance in June, saying that consumers were buying more clothing thanks to salary increases and warmer weather. The company is often considered a bellwether for the health of Britain’s retailers. 

Next has about 500 stores in the UK and Ireland plus a large online division offering the company’s own range of fashion as well as third-party brands in the UK and in other countries. 

There are some signs inflation in the UK is waning. Prices in UK stores fell for the first time in two years in July, the British Retail Consortium said Tuesday. Still, higher mortgage rates threaten to erode consumers’ disposable income.

Outside of the UK, European apparel makers and retailers have been reporting mostly positive results this earnings season. German clothing retailer Hugo Boss AG raised its earnings and sales forecasts on 2 August. Last week, Puma SE reported earnings that topped analysts’ estimates.

Next shares have risen 18% this year.