- Full-price sales up 5.7%
- Full-year guidance unchanged
- Firm outperforming the market
High-street retailer Next (NXT) beat expectations with its first-quarter trading update but tempered its outlook for the second quarter so as to leave its full-year guidance unchanged.
Traders took the opportunity to top-slice the shares, which have gained over 12% this year, sending them lower by 72p or 0.8%.
OUTLOOK UNCHANGED
Having guided the market to expect a 5% rise in full-price sales for the quarter to 27 April, the Leicestershire-based firm delivered a 5.7% increase driven by online sales which rose 8.8% over the period.
For the second quarter, where sales were forecast to be flat due to a strong comparable period last helped by exceptionally warm weather from late May into June, the group trimmed its guidance to a dip of 0.3% so as to leave first-half sales up 2.5% in line with its original target.
The outlook for full-year full-price sales was left unchanged at £4.9 billion, an increase of 2.5%, while group revenue including markdowns and sales from subsidiary brands such as Fat Face and Reiss are seen rising 6% to £6.2 billion.
Pre-tax profit guidance was also left unchanged at £960 million, with EPS attributable to shareholders seen rising 4.8% to 606.3p per share.
OUTPERFORMING THE MARKET
For full-price sales to have increased by 5.7% in the three months to the end of April, Next is clearly outperforming the both the clothing and household goods markets.
According to the ONS (Office for National Statistics), in value terms clothing sales rose very slightly in March but were down by 1.7% on average in the prior three months while household goods sales were down in March for a seventh consecutive month (April sales will be released in mid-May).
Data collected by Barclaycard showed similar trends, with clothing sales down more than 1% on average each month from December to March and overall household spending down by an average of 6% each month over the same period.
The BRC (British Retail Consortium) reported weaker sales of clothing and footwear in March due to wet weather, although it said homewares and home textiles were popular with consumers sprucing up their homes ahead of Spring.
‘As April signals big increases in the sector’s cost base – through the rise in minimum wage rates and business rate hikes for the larger high street brands – retailers will be hoping that the bounce back of March sales is more than just an Easter blip’, commented Linda Ellett, UK head of consumer markets at KPMG which compiles the retail sales monitor in conjunction with the BRC.
