Fashion retailer Next has raised its profit forecast for the fourth time this year after cooler weather brought an increase in sales.
The Leicestershire-based chain had initially suffered subdued sales of its autumn ranges thanks to warmer weather in September and early October – though that turned around in the second half of last month. Overall it meant full price sales for August, September and October were up 4 per cent on the same time in 2022, compared to the 2 per cent it had previously expected for the quarter.
As a result the FTSE 100 business said it was raising its full year pre-tax profit guidance by £10 million to £885 million, on expected sales of £4.74 billion – which would be 3.1 per cent up on 2022.
Britain basked in the joint-hottest September on record, with the longest heatwave seen for that month after the country recorded seven consecutive days of temperatures above 30C.
Retailers were hit hard by the unseasonable warm early autumn weather, with shoppers shunning demand for warmer autumn lines including coats, jackets and knitwear.
Next said sales were “volatile” in its third quarter as a result of the weather pattern, which also saw a cooler than average August.
It said: “We believe the volatility in sales performance is a result of changing weather conditions rather than any underlying changes in the consumer economy.
“In an autumn season cooler weather is good for sales, warmer than average weather depresses sales.”
The group has repeatedly increased its profit outlook, last raising guidance in September after a 5.4 per cent rise in half-year sales.
Its interim results were also boosted by price hikes after a 7 per cent increase over its first half, but it said it would slow down price increases – to 2 per cent – over the autumn and winter.
The latest update also comes after Next added another retail brand to its growing empire, snapping up high street rival Fat Face last month for £115.2 million.
It is the latest in flurry of acquisitions by Next, which runs 460 of its own shops, after investing in brands including Reiss, Made.com, Joules and Cath Kidston.
Shares in the business were up 3.6 per cent this morning at 7,133.76p. This time last year they were less than 5,000p.
Russ Mould, investment director at online stockbroker AJ Bell said one of the reasons Next was staying ahead of other retailers was the quality of its products.
He said: “It’s been a turbulent year for retailers thanks to consumers battling high interest rates and, more recently, unusual weather patterns which meant the wrong kind of clothes were on the shelves.
“For example, t-shirts and summer dresses were less appealing during the cooler than average August, and then retailers’ winter range gathered dust during a warmer than average September.
“Nonetheless, Next has managed to navigate through the challenges and once again has upgraded earnings guidance. Rival retailers will certainly want to know how it has managed to stay above water.
“The latest success can be attributed to online sales, suggesting Next continues to stock what people want and at price point that shoppers deem to be good value for money.
“One of Next’s key attractions is that its clothes are considered to be decent quality. While they may cost more than you might find with ASOS or H&M, there is a perception that the items will last longer and so it is worth paying a bit more.
“Sales have really improved since the weather normalised in mid-October, with temperatures dropping no doubt being the catalyst for people to reach for their phones or laptops to order a new jumper, coat or pair of gloves.
“The key challenge for Next is to try and maintain recent sales momentum.”
