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Next maintains profit forecast, despite dip in retail sales and difficult trading

Next, the UK’s second biggest clothing retailer, is maintaining its full year profit forecast, despite a dip in retail sales against tough comparisons and continued difficult trading caused by wet weather.

Total retail sales dipped 3.9% with like-for-likes estimated to have dropped 6.8% in the 13 weeks to April 28.

A rise of 11.8% in Directory sales boosted performance, while brand sales – of which net sales from new space were up 2.9% - edged up 1.4% in the first quarter, despite declining retail performance.

The first quarter sales rise is set against tough comparatives - last year’s performance was boosted by the Royal Wedding and warmer weather.

Next is confident that its first half sales will be within its guidance of 1% and 4%. It forecasts first year profits will be ahead of last year - within its £560m to £610m full-year guidance. It will to continue with its share buyback programme and intends to invest £200m over the year.

The Olympics and the Jubilee will “pale into insignificance” for retailers, unless the weather improves, Next boss Lord Simon Wolfson told Drapers.

Chief executive Wolfson said that while Next is “in line” with its forecast, if wet weather continues it will be unable to sell high summer stock.

The UK’s second biggest clothing retailer has “fully committed” to its summer stock and is unable to cancel orders.

Wolfson said: “The reality is that if the weather doesn’t get better, we won’t be able to sell our high summer stuff and that will go into the end of season sale. We’re not sitting here thinking about promotional strategies. When the good weather comes, however, you do get pent up demand. We are actually in line with the forecast, despite the bad weather.”

He added: “For the second half, we’re expecting that the Jubilee will be positive for sales but on the Olympics, I’m not sure. It will assimilate related product sales but there’s the chance that people will stay in and watch the events at home. Both of these events though will pale into insignificance unless the weather improves.”

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