Britain’s Next keeps profit guidance after first-quarter sales rise

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Posted By Jessica Weisman-Pitts

Posted on May 1, 2024

Britain’s Next keeps profit guidance after first-quarter sales rise

By James Davey

LONDON (Reuters) -British clothing retailer Next on Wednesday kept its forecast for annual profit after reporting a 5.7% rise in first-quarter full price sales, slightly ahead of its guidance.

With more than 800 stores in the UK and Ireland and nearly 8 million online customers, Next is often considered a gauge of how British consumers are faring.

The group reiterated that it expects its sales in the second quarter to be weaker than the first quarter to April 27 because last year it benefited from particularly warm weather from late May to the end of June.

It expected a profit before tax of 960 million pounds ($1.2 billion) in its 2024/25 year, up from 918 million pounds in 2023/24.

It also kept its forecast for full-price sales to increase 2.5% over the year, guiding to a fall of 0.3% in the second quarter and a rise of 2.5% in the third and fourth quarters.

Shares in Next were down 1% in early trading on Wednesday, paring 2024 gains to 10%, reflecting the lack of a profit upgrade for the year.

First-quarter store sales were flat, while online sales were up 8.8%.

Last month, Next said prospects for Britain’s consumers were the brightest since before the pandemic.

It said positives included wages rising faster than prices and zero inflation in the group’s own products. Risk factors were a weakening jobs market and consumers having to renegotiate mortgages at higher rates.

“Next should benefit from improving UK real disposable incomes albeit it may still be affected somewhat by the lagged impact from higher interest rates,” RBC Europe analysts said.

Industry data published on Tuesday showed UK clothing and footwear prices fell in April as retailers offered promotions to encourage consumer spend.

Next has guided for its selling prices on like-for-like goods to be down 2.0% in its first half versus last year, with deflation of 0.5% in the second half.

Last week rival Primark raised its profit outlook despite cautioning the consumer environment “remains soft”.

(Reporting by James Davey; Editing by Sachin Ravikumar and Barbara Lewis)

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