Next nudges up profit guidance after blistering summer despite 'volatile' market

 
Sebastian McCarthy
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Next posted half-year pre-tax profits of £311.1m compared with £309m in the same period last year (Source: Getty)
British fashion retailer Next nudged up its full-year outlook this morning, after the firm’s strong summer performance unexpectedly carried on into August and September.


Next posted half-year pre-tax profits of £311.1m compared with £309m in the same period last year, raising its full year guidance by £10m to £727m.

The better-than-expected forecasts have largely been riven by a rise in sales, which climbed 4.5 per cent in the first six months of 2018 compared with the same period last year.

Read more: West end retail giants 'hit by staff shortages'

Next also said that although there had been a numer of "significant challenges" in preparing for a no-deal Brexit outcome, they did not pose a "material threat to the ongoing operations and profitability of Next's business here in the UK or to our £190m turnover business in the EU".

In a trading update for its second quarter at the beginning of August, Next recently said the recent hot weather had boosted demand for its summer ranges across clothing and lifestyle despite missing overall sales expectations.

Today the company added: “When we issued our August Trading Statement we believed that there was a high risk that the sales gained in July would be offset by losses in August. As it turned out, we did not experience any material loss of sales in August or early September.”

Read more: Online retail to be Next's summertime saviour as hot weather boosts sales

However, the firm’s trading note also warned that the UK retail market remains volatile, and that many of the headwinds “have not abated”, citing structural changes to the industry and unprecedented weather fluctuations.

It said: “As expected, sales in our stores (which now count for just under half of our turnover) continue to be challenging).”

“With retail costs rising, shop leases coming up for renewal, uncertainty about the economic outlook, Next has its work cut out," according to Fidelity International's Emma-Lou Montgomery.

The retailer had previously warned earlier this year that it was facing its toughest trading conditions in 25 years as customers turned to budget brands such as Primark and online-only favourites, including the London-listed Boohoo which will release its results tomorrow.

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