Pent-up demand for summer outfits delivers sales surge for Next
Shoppers’ pent-up demand for summer outfits has helped fashion retailer Next smash sales targets and lift its profit forecast.
A staycation boost to UK consumer spending and the build-up of savings during lockdowns were also given as key factors behind the success.
Shares in the group surged higher as it reported an 18.6% rise in full-price sales for the 11 weeks to 17 July compared with 2019 levels.
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Next had previously said it expected sales growth of 3%.
The company also said it had decided to repay part of the business rates relief it had received during the pandemic – worth £29m.
Meanwhile it plans to distribute £240m in surplus cash to shareholders through a special dividend later this year.
Next attributed the sales performance to factors including “pent-up demand for adult clothing, with many customers having made fewer summer purchases during the last 18 months”.
It also pointed to “the onset of extremely warm weather at the end of May and start of June” and said growth had slowed significantly once that spell had passed.
Meanwhile, Next said, fewer holidays taken overseas “are likely to have increased domestic spending in the UK” while consumer savings had “materially increased over the last year”.
Store sales were still lower than pre-pandemic levels
It cautioned that it did not expect sales for the rest of the year to perform at such “exceptionally strong levels”.
The group lifted its guidance for full year profits by £30m to £750m.
Next achieved the sales cheer despite store sales still lagging 6% behind where they were in 2019, with online trade up 44%.
Shares were 7% ahead in midday trading.