UK: Better summer brightens Next profit prospects
Fashion retailer Next Plc has raised its internal profit forecasts on the back of improved trading and better summer weather in the UK.
The company brought forward its trading update by a week because of the better than expected full-price trading in recent weeks, plus improved clearance rates in its end-of-season sale.
For the 25 weeks to 18 July, the first day of the company's sale, Next retail sales were up 1.4%, but like-for-likes fell 1.9%.
Next Directory sales increased 1.1%, and total Next brand sales, excluding VAT, rose 1.3%.
"Sales of summer clothing have benefited from much better weather than last year," the company said.
"We estimate that the warm temperatures have improved these Next Retail sales by between 2% and 3%, which will put sales for the first half ahead of the guidance given on 6 May."
The company has now added an extra GBP15m (US$24.6m) to its internal profit forecasts for both the first half and the second half of the fiscal year, and has also increased its capital spending forecast by GBP10m.
Nonetheless, Next said the continued downturn and rising levels of unemployment would probably lead to consumers continuing to moderate their spending during the second half of the fiscal year.
It projected like-for-like sales down 3.5-6.5%.
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