Next upgrades profit guidance by £10m following positive start

Fashion and homewares retailer Next has reported a positive half year period as well as upgrading its profit guidance for the year by £10m.

According to its latest trading update, Next said sales in retail stores recovered, while online growth appears to have reverted back to its longer term trajectory. 

“Many product trends have also returned to pre-pandemic norms. Lockdown winners such as Home and sportswear retreated, while formalwear returned to favour. As anticipated, online returns rates and surplus stock also reverted to pre-lockdown levels.”

Next now expects to make a profit of £860m this year after its second quarter sales accelerated by 5%, £50m ahead of previous forecasts. Online sales rose 0.2%, while retail sales jumped 12%.

Next added: “Full price sales in the quarter were +4.7% stronger than we expected. In part, we believe this over-performance has been the result of unusually warm and dry weather in June and July. A marked return to formal dressing, perhaps driven by pent up demand for social events (weddings, etc.), has also played to the strengths of the Next brand.

“As anticipated, returns rates have reverted and are currently close to pre-pandemic levels at 42%.  This follows two years of exceptionally low returns rates during the pandemic. The low returns rates during the pandemic were mainly driven by product mix, with sales of low returning categories such as Home, childrenswear and sportswear far exceeding their normal levels.”

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