The warm spring has given a boost to sales at fashion retail chain Next in what will be see as a hopeful sign for the high street as a whole.
The company said full price sales were up 11.4% compared to last year in the 13 weeks to 26 April. This was £55 million ahead of internal forecasts, which had pencilled in a rise of just 6.5%.
In a trading update Next said it believed “much of the over-performance in the first quarter has been the result of warmer weather, which has benefited the sale of summer-weight clothing.”
The shares rose 180p or 1.5%, to 12,475p on the news. They are up more than 28% already this year.
Next is the second company this week to cite the long dry and often sunny spell since March for higher than expected sales. Yesterday pub group Wetherspoon’s said “favourable weather” had contributed to a 5.6% rise in sales in the first quarter of the year.
April was the sunniest since records began in 1910, with 47% more sunshine than the long-term average while the mean temperature 9.6°C, was 1.7°C above the long-term average, making it the third warmest April since records began in 1884.
However Next cautioned that some of the extra spending in the sunny first quarter might prove to be brought forward from the second quarter and has not increased sales guidance for the rest of the year. Guidance for full price sales has been tweaked up from £5.3 billion to £5.4 billion.
Guidance for pre-tax profit has been bumped up by £14million to £1.08 billion.
The outperformance was particularly in physical shops, which “benefit disproportionately from the favourable weather.” Retail sales are expected “to return to being broadly flat for the rest of the year.”
Next said it was more cautious about sales in the second half because the comparative numbers last year were stronger and because it believes the effects of this April’s National Insurance increases “will begin to filter through to the wider economy in the second half.”
The update was swell received by investors with Kate Calvert, analyst at investment bank Investec saying they underlined that Next “is a formidable business.”
John Moore, senior investment manager at RBC Brewin Dolphin, said: “Next continues to shine, buoyed in the first quarter of this year by the good weather. It’s another better-than-expected update, underlining the strength and consistency of the business. While the sun might have brought forward sales, Next is in a real sweet spot in terms of its brand offering, the roll out of its hosting format for third parties, and its traditional retail operation.
“We’re reaching the point with Next where anything other than solid momentum and exceeded expectations would be considered a disappointment, but the company continually delivers and shows no signs of stopping any time soon.”
