Next has upgraded its annual profit forecast for the second time this year after warmer spring weather boosted sales beyond expectations in the first quarter.
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The British fashion and homeware retailer reported an 11.4% rise in full-price sales for the 13 weeks to 26 April, significantly above its projected 6.5% growth. The stronger performance delivered a £55 million uplift in sales.
As a result, the company now expects to post a pre-tax profit of £1.08 billion for the 2025/26 financial year, up from the previous estimate of £1.066 billion. Next attributed the strong Q1 figures largely to the favourable weather, noting that 'we believe much of the over-performance in the first quarter has been the result of warmer weather, which has benefited the sale of summer-weight clothing.'
However, the retailer cautioned that some of the sales may have been pulled forward from the second quarter. 'Despite the strength of Q1, we are not increasing our sales guidance for Q2, or the rest of the year,' it said.
UK retail sales rose by 5.2%, while total UK online sales increased 8.9%, including a 15.7% rise in third-party label sales. Overseas online sales climbed 29.6%, reflecting growing international demand.
While retail trading outperformed expectations, Next warned the trend might not hold. "In our experience, shops benefit disproportionately from the favourable weather. So we are expecting our retail sales to return to being broadly flat for the rest of the year," it added.
Despite robust early-year trading, the company maintained a cautious outlook due to potential headwinds such as National Insurance increases and tougher year-on-year comparisons in the second half. It kept its full-year sales growth forecast at 6%.
Total group sales, including markdowns and investment income, are projected to reach £6.6 billion, representing a 5% increase on last year.
Source: LinkedIn.