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Next (NXT) +1.68% on sales beat, raised profit forecast
British clothing retailer Next (NXT) ended Thursday 1.68% higher in London after it beat its internal sales forecast by £75m in the latest quarter.
Next had previously guided for a 10% drop in sales for the 13–week period to 1st May compared to two years ago, but the reopening of stores in mid-April gave it a timely boost.
This meant that sales only fell slightly (-1.5%) compared to the same period in 2019, when trading on the high street was in full swing before the start of the COVID-19 pandemic.
While retail sales are expected to tumble 20% from two years ago, Next is confident of delivering a profit of £720m for the full year, with its online platform expected to grow 24% and overall sales to tick 3% higher.
In a similar trend to other retailers, digital has been a strength during the last 12 months, and in the last quarter, Next’s online sales soared 65%.
The first 10 weeks were challenging for the FTSE 100 company though due to the lockdown–enforced closures of brick–and–mortar stores in the UK and Ireland.
Next said that there was pent–up demand following the reopening of retail last month, and this resulted in a 19% spike in sales in the final three weeks of the quarter.
However, it cautioned that the short–term trend may not hold for the rest of the year.
Next added that while online sales have increased, many sales that would have been made in stores have not been “recovered” elsewhere.
Peel Hunt analysts see good things for Next after noting that it “remains one of the most relevant UK platforms, fully geared into consumer recovery”.
Next shares traded higher on Thursday and eventually finished up 1.68% at 8,262p.
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