Next has reported bumper sales between May and July as sunnier UK weather and a disruptive hack at its rival M&S sent customers flocking to the clothes and homewares retailer.
Full-price sales at Next in the 13 weeks to 26 July rose by 10.5% compared with the same period last year, which was £49m ahead of its guidance, which had predicted a 6.5% rise in takings.
“In the UK, we believe that the over-performance was largely due to better than expected weather and trading disruption at a major competitor,” Next said, referring to the devastating cyber-attack that hit M&S. The hack forced M&S to pause customer orders through its website for almost seven weeks and let to some shortages in stores.
Next said its international sales also grew faster than expected, which it chalked up to a digital marketing strategy that had “proved more effective than anticipated”.
The figures solidify Next’s winning streak after the retailer surpassed £1bn in profit for the first time earlier this year. While the group sells clothes and homeware under its Next brand, it also controls the UK distribution of the US brands Gap and Victoria’s Secret, creates Laura Ashley homewares, Ted Baker childrenswear and lingerie, and sells dozens of other brands it does not own via its website.
The retail group, which is headed by the Conservative peer Simon Wolfson, said it was now raising its forecast for growth in full-price sales in the second half of the year to 4.5%, up from 3.5% previously, which is expected to result in an extra £27m in sales for the group.
This is primarily due to stronger than expected performance at its international operations after the marketing successes. Next said it was not raising guidance for the UK, where sales are expected to slow in the second half of the year to a growth rate of 1.9%, versus 7.6% in the first half.
The retailer said this was partly due to the UK’s hike in employer national insurance contributions, which it said were expected to “continuing to filter through the economy” and would “dampen consumer spending as the year progresses”.
It also is unlikely to see any continued benefit from good UK weather and the disruption at M&S. “We do not expect either of these factors to have a material effect in the second half and so we are not increasing our guidance for UK sales,” Next said.
