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Next sales benefit from sunny Easter and royal wedding fever

Next has upped its full year sales and profits forecast after a strong Easter helped to drive fashion sales at the chain.

Total sales, excluding VAT, at the group in the 13 weeks to April 30 rose 5.2%, of which 2.1% was gained from new space. No retail like-for-like figure was given.

The better-than-expected performance was driven by a 14.8% jump in sales at Next’s online and catalogue arm, Next Directory. Retail sales rose 0.9%, driven by a robust performance from womenswear.

‘Over-performance’

The retailer estimated that at least 2.5% of the “over-performance” came as a result of the sunny weather over the Easter weekend and “spending in anticipation of the royal wedding bank holiday”.

However, Next conceded that it was likely that these factors had brought forward summer purchases and said it did not forecast growth at similar levels in its second quarter.

Profits ahead £15m

It said that it expected total sales to be in the range of 1% to 4% for the full year, giving Next a pre-tax profit range of between £535m and £585m, some £15m ahead of what it forecast in March.

Range improvements in womenswear

The improvement in sales in Next’s retail division was driven by “better” ranges and improved stock availability on best selling lines, particularly in womenswear, the retailer said.

Directory sales jumped off the back of its improved delivery service, including its order by 9pm for next day delivery marketing campaign and better stock availability.

Next said that gross margins were “well controlled and in line with internal budgets”.

Cautious outlook

Despite the upbeat figures, Next said it remained cautious for the full year and that despite the recent uplift in sales there had been no change in the underlying trading environment. It highlighted public sector cuts and ongoing inflationary rises as key pressures on spending.

Pricing

Next said: “In addition the ongoing effects of increases in our own selling prices are also likely to moderate demand for our products.” As previously indicated, Next said that prices would be higher in the second half of the year at about 8%.

However, it added that it would come up against softer comparatives in its final quarter, when the snowy weather impacted sales. It added that there “was every chance” commodity prices would ease towards the end of the year.

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