Next increases profit guidance after strong first half

Clothing retailer Next yesterday nudged up its annual sales and profit forecasts after beating its own guidance for first-half sales growth, boosted by warm weather in June and July.

Shares in the firm, which trades from more than 500 shops in Britain and Ireland, about 200 mainly franchised stores overseas, and the Directory catalogue and internet business, rose up to 2% yesterday — near to its record high — after it said it would pay another special dividend, its third this year.

Next has outperformed peers for a decade due to a strong online business, rapid expansion at home and abroad, and diversification into new product areas, such as homewares.

It said full-price sales rose 3.5% in the 26 weeks to July 25, ahead of company guidance of flat to up 3%, and first-quarter growth of 3.2%.

Full-price sales from stores were up 0.8%, while Directory sales were up 7.5%. Despite the solid trading, the firm said consumer demand was volatile over the six months.

“We believe the improvements experienced at the end of the season were mainly driven by warmer weather,” it said.

Earlier this month, rival Marks and Spencer posted a 0.4% fall in underlying sales for the quarter ending June 27 for general merchandise, which includes clothing.

Next raised the mid-point of its profit guidance for the 2015-16 financial year by 1.9% to £825m. It also hiked full-year sales growth guidance to 3.5%-6%, from 1.5%-5.5% previously.