In a trading update today (2 November), Next plc reported a 0.4% increase in full-price sales versus last year, which is slightly ahead of company expectations.
Retail sales for the UK and Ireland were up 3.1% for the 13 weeks ended 29 October, while full interest income increased 8.9% in the period.
Online sales, however, were down 1.9% for the quarter, with total product full-price sales dropping 0.1%.
Next plc is maintaining its guidance for full-year profit before tax at GBP840m (US$966m), up 2.1% versus last year. Based on this, earnings per share of 554.5p would be up 4.5%. The retailer is also maintaining previous guidance for full-price sales for the rest of the year to be down 2% versus last year.
Next plc is expected to give an update on sales to 31 December on 5 January 2023.
Next plc reveals muted sales growth
“After reporting a solid H1 with total group sales rising by 14.9%, Q3 FY2022/23 was more of a reality check for Next, with total full-price sales increasing by a muted 0.4%, as UK consumers become increasingly aware of the higher costs they will face throughout the winter,” Emily Salter, retail analyst at GlobalData explains.
“This performance was slightly ahead of the retailer’s expectations though, as it was boosted by an especially strong week at the end of September as the temperature dropped and consumers purchased clothing & footwear for winter, including items with higher price points like coats and jackets.
“After reducing its FY2022/23 full-price sales and profit outlook slightly in September, Next has maintained that guidance this morning. To help protect profits, Next has already raised its prices by 8.0%, so it has little room to increase them any further without putting shoppers off from purchasing more basic and essential items, such as childrenswear and underwear, unless it invests in its price architecture to offer more entry-level prices.
“Next expects its full-price sales in Q4 to fall by 2%, though this is against a strong comparative (+17% versus FY2019/20) as many consumers chose Next’s market-leading digital platform when switching to purchasing online last year as Covid-19 cases rose again. The retailer’s sales over the golden quarter will be boosted by many consumers being eager to celebrate this year without any Covid restrictions, boosting demand for partywear in particular. Next’s proposition will enable it to meet this demand, with its credit offer likely to be especially popular in the current macroeconomic climate, as well as its wide range of brands online offering a variety of different styles and price points. However, due to financial pressures, many consumers will either be reluctant to purchase any items, trade down to value retailers such as Primark and George, or purchase second-hand items instead.”