Next brushes off warm autumn weather hit to up profit outlook once again

1 November 2023, 14:54

Next financials
Next financials. Picture: PA

The retailer said it now expects group underlying pre-tax profits to lift 1.7% over the year to £885 million on sales up 3.1%.

High street retailer Next has raised its full-year profit forecast for the fourth time this year after better than expected sales, despite unusually warm weather affecting demand for autumn ranges.

The fashion chain said weekly sales fell by up to 7% in September during the heatwave that month and were also lower during the first half of October.

Sales bounced back, though, as the colder weather kicked in last month – up 16% and 11% in the first two weeks of October respectively – helping overall sales in the group’s third quarter to lift 4%.

This was better than its previous guidance for growth of 2% in the August to October quarter.

Next said it now expects group underlying pre-tax profits to lift 1.7% over the year to £885 million on sales up 3.1%.

This compares with its earlier guidance for profits of £875 million and a 2.6% increase in sales.

Shares were more than 4% higher in afternoon trading on Wednesday after the profit upgrade.

The UK basked in the joint-hottest September on record, with the longest heatwave seen for that month after the country recorded seven consecutive days of temperatures above 30C.

Retailers were hit hard by the unseasonable early autumn weather, with shoppers shunning demand for new autumn lines including coats, jackets and knitwear.

Next said sales were “volatile” in its third quarter as a result of the weather pattern, which also saw a cooler than average August.

It said: “We believe the volatility in sales performance is a result of changing weather conditions rather than any underlying changes in the consumer economy.

“In an autumn season cooler weather is good for sales, warmer than average weather depresses sales.”

The group has repeatedly increased its profit outlook, last raising guidance in September after a 5.4% rise in half-year sales.

Its interim results were also boosted by price hikes after a 7% increase over its first half, but it said it would slow down price increases – to 2% – over the autumn and winter.

The latest update also comes after Next recently added another retail brand to its growing empire, snapping up high street rival Fat Face last month for £115.2 million.

It is the latest in flurry of acquisitions by Next, which runs 460 of its own shops, after buying brands including, Joules and Cath Kidston.

By Press Association