Next lifts profit guidance after Q1 beats forecasts

(Sharecast News) - UK fashion retailer Next lifted annual profit guidance after reporting forecast-busting first-quarter sales, citing warmer weather which boosted purchases of summer clothing, but held annual estimates of flat revenues. Group sales in the three months to April 26 rose 11.4%, or £55m, compared with forecasts of a 6.5% increase. Pre-tax profit guidance was lifted by £14m to £1.08bn.

"It is likely that some of these sales have been pulled forward from Q2. So, despite the strength of Q1, we are not increasing our sales guidance for Q2, or the rest of the year," the company said on Thursday.

"Our performance in both the UK and overseas was better than we had anticipated. Sales in our retail shops have been much stronger than we expected but, in our experience, shops benefit disproportionately from the favourable weather. So we are expecting our retail sales to return to being broadly flat for the rest of the year.

Next reiterated caution issued at its full-year results in March, when it warned of deteriorating consumer confidence amid higher living costs.

"We are more cautious about sales in the second half because the comparative numbers in autumn-winter 2024 were much stronger. In addition, we believe that the full effects of this April's National Insurance increases will begin to filter through to the wider economy in the second half," it said on Thursday.

Reporting by Frank Prenesti for Sharecast.com