Next enjoys buoyant Q1 but stays cautious on full-year result

By

Sandra Halliday

Published
May 1, 2019

Next has managed to beat its own sales expectations in Q1 (the three months to April 27) with full-price sales up 4.5%. That was 1.3% ahead of what it had predicted and was mainly as a result of the unusually warm weather seen over the Easter holiday period, “which was particularly helpful to our retail stores,” it said.  

Not that the outperformance pushed its physical retail stores into positive territory as full-price sales there (excluding VAT) dropped 3.6%. But online, which unlike many stores-based retailers, represents almost half of the firm’s total turnover, rose a healthy 11.8%. That meant full-price product sales were up 4% with a strong rise of 11.4% in income from finance adding an extra boost to take the overall increase to the 4.5% headline figure.

The company also said that new retail space added 0.3% to the uplift.

As expected, the company saw strong sales growth during February because comparisons were easier as sales had been dented by extreme winter weather last year. March was as expected and April got another weather boost.

So does the strong quarter bode well for the year as a whole? Not really, or at least, maybe not, as it’s too early to tell at the moment. 

“We do not currently believe that the over performance of the first quarter can be extrapolated through to the rest of the year,” the company said. “The over performance amounted to sales of around £10 million. Given this is a relatively small number in the context of annual sales, we believe it is too early to revise our full-year sales and profit guidance.”

For the year, the company continues to expect store sales to fall by 8.5% and e-sales to rise 11% with pre-tax profit to fall 1.1% to £715 million. That means that for Q2, the firm isn’t expecting a repeat of the Q1’s strength, with full-price sales to fall 0.5%.