Better than expected Q1 will boost Next's profit figures

By

Sandra Halliday

Published
May 10, 2018

All eyes are on Next at the moment as the former high-street star works to reignite growth in its large store portfolio while pushing growth much higher in its once dominant online operations. Did it achieve those aims in Q1?

Up to a point, yes. In the 14 weeks to May 7, its full price online sales rose as much as 18.1% and even though retail store sales were down 4.8%, total brand sales were up a respectable 6%, with new space adding 0.4% to that figure.

The company provided a graph showing its weekly sales compared to the same period last year and the news looked good through most of the quarter, despite three weekly downturns in the 14 weeks. The first was caused by heavy snow and the other two by weak comparisons to the prior year when the late Easter had boosted sales. 

Encouragingly too, the mini heatwave during April sent that particular week’s sales up more than 25%. It’s to be hoped that the company has seen a similar uplift at the start of Q2 with early May having been warm and sunny.

So overall, sales in the first quarter were better than the company expected and were around £40 million ahead of its internal forecast, boosted in recent weeks, as mentioned, by unusually warm weather. This sales over-performance will add around £12 million to its full year profit and the company has upgraded its profit guidance in line with this.

And what about sales for the rest of the year? Earlier, it had said that the Q1 sales performance “would be flattered by the under-performance of our ranges in the same period last year,” so it didn’t expect sales for the rest of the year to be as strong as the first quarter. It continues to think this will be the case. 

This means that despite the 6% sales uplift for the quarter just ended, the following three quarters should see a rise of only 1%, meaning a full-year increase of just 2.2%. And of course, it has to be remembered that this only accounts for full-price sales and not clearance merchandise. We'll have to wait a bit longer before we get the full story in its complete results announcement for the first half in August.