Next chief executive Simon Wolfson gave the strongest indication yet that the country was heading out of recession and into a stabilisation period at the retailer’s first-quarter results this week, which were better than forecast.
Wolfson told Drapers: “We’re addressing the situation and it’s not as bad as people are making out. I’ve been quite vocal about this; retailers are not facing Armageddon. It’s almost impossible to say we’re still in a recession, neither are we in a total recovery. What we are seeing is a stabilising of the economy.”
Next upped its profit forecasts this week after recording a like-for-like sales fall of just 2.3% for the 14 weeks ended May 2 - well ahead of management estimates that sales would decline by between 6% and 9% in the first half.
Next said it had readjusted its first-half forecasts on the back of the first-quarter results and that it now expected sales to be down by between 4% and 7%. It said it had added £15 million to its internal profit forecasts as a result.
Wolfson said sales had been bolstered by the late timing of Easter and warmer weather, and that a continuation of the warm weather in the run-up to summer would be a big boost for fashion retailers.
Wolfson added: “I am happier with the ranges than I’ve been in a long time. There is newness in womenswear and we’ve been quicker to respond to fashion trends. We’ve come a long way but we’ve still got further down the path to go.”
However, he warned that a potential swine flu pandemic could affect sales, although said it remained unclear what impact an outbreak would have on shopper behaviour.
Next’s green shoots
- Next’s figures for the 14 weeks ended May 2
- Total sales +1.1%
- Next retail like-for-likes -2.3%
- Next Directory sales +1.6%
- Revised first half like-for-likes forecast -4% to -7%