Next retail sales get a boost from UK’s heatwave

(qlmbusinessnews.com via theguardian.com – – Wed, 1st Aug 2018) London, Uk – –

Retailer warns boost – with online figures jumping by 12.5% – is unlikely to last

Britain’s heatwave helped Next to stronger than expected sales over the past three months – but the retailer warned the boost from the hot weather was unlikely to last.

The clothing and homeware firm said sales rose 2.8% in the 12 weeks to 28 July, driven by a 12.5% jump in online sales as consumers updated their summer wardrobes. Sales at its shops, however, fell by 5.9% over the period.

The retailer warned that some of the sales growth probably reflected consumers bringing forward purchases they might have made in August.

“Full-price sales in the second quarter were up 2.8% on last year and ahead of our guidance. We believe that this overachievement in sales was due to the prolonged period of exceptionally warm weather, which greatly assisted the sales of summer weight product.

“It is almost certain that some of these sales have been pulled forward from August, so we are maintaining our sales and profit guidance for the year to January 2019.”

The state of UK retail's ill-health

Shares fell 6% after the trading update was published, making Next the biggest faller on the FTSE 100.

In the first half of the year overall, full price sales – excluding discounted items – rose by 4.5% compared with the same period a year ago. This was entirely driven by online sales, which rose 15.5%, while sales across its 500 shops fell 5.3%.

The figures are the latest evidence of the tough conditions on the high street, with household names such as House of Fraser fighting for survival . Hundreds of stores have been closed and thousands of jobs lost on Britain’s high street in recent months.

Next expects to make a profit before tax of £717m this year, down 1.3% from last year, which the firm’s chief executive, Simon Wolfson, described as the toughest year in the past 25 years. It would mark the third consecutive fall in annual profits.

The retailer started its end-of-season sale a week earlier than last year and went into it with 20% less stock than last year. The sale has fared better than forecast and added £4m to profits, although this has largely been offset by higher warehouse and distribution costs.

Taking markdown sales together with full-price sales, total sales grew 3.9% in the first half.