Next warns on Q2 but holds guidance as first-quarter sales beat estimates

1st May 2024 07:04

(Sharecast News) - UK fashion retailer Next said first-quarter sales came in ahead of forecasts and held guidance for the full year but warned that the next three months would be weaker due to wet spring weather.

Full-price sales in the thirteen weeks to April 27 were up 5.7% year on year, slightly ahead of guidance for a 5% rise. The performance was helped by Next's online arm, with growth of 8.8%.

"We expect the sales performance in the second quarter to be weaker than the first quarter because last year benefited from particularly warm weather from late May through to the end of June," the company said in a trading statement, and forecast a fall of 0.3% for the period before a 2.5% increase in the third and fourth quarters.

Next still expects annual profit before tax to increase by 4.6% to £960m.

Total annual group sales are expected to be up 6% on last year to £6.2bn, 3.5% higher than expected underlying growth in full-price trading of 2.5% to £5bn. Next said the difference in growth was due to the timing of acquisitions completed last year when it bought 97% of FatFace in October and increased its stake in Reiss to 72% from 51% in September.

Richard Hunter, head of markets at Interactive Investor, said Next shares were "certainly on a roll given Next's recent ability to continually confound expectations, having risen by 34% over the last year, as compared to a gain of 4.8% for the wider FTSE 100".

"The rise has also brought the price in line with its historical average in terms of valuation, which has resulted something of a stalemate in terms of the market consensus. It would appear that however enticing Next's prospects might be, there is some agreement that the share price is up with events for now, such that the general view of the shares remains at a 'hold'."

Reporting by Frank Prenesti for Sharecast.com