Next increases profit guidance as warm weather triumphs

In a trading update for the seven weeks to June 19, 2023, Next posted a 9.3% increase in full-price sales year on year, which it said was “materially better” than the 5% decline in sales previously forecasted.

The fashion giant also exceeded its full-price sales predictions for the period by £93m.

Next has upgraded its full-price sales guidance for the full year by £137m and increased its full-year profit before tax guidance to £835m, up £40m from its previous guidance revealed last month.

Despite Next saying that it was “too early in the year” to alter its half or full-year sales expectations, the retailer called today’s update an “over-performance” of its targets.

Next credited its performance to the “onset of warmer weather” as well as annual salary increases, which have delivered “a significant uplift in real household income”.

In terms of outlook, Next said it expects the positive impact of the weather and recent pay rises on sales to decline and added: “If recent pay rises and the sudden change in weather have indeed contributed to the current over-performance, then it is reasonable to expect that the effect will diminish over time because ongoing inflation will slowly erode the positive effect of annual pay increases.  

“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.”