Next saw like-for-like sales down just 1.9% for the 25 weeks to July 18 - a better than expected performance from the high street chain, which has led it to add £15 million to its first half profit forecast.
Next brought forward its trading statement by one week to update the market this morning after warm weather put total retail sales ahead by 1.4% over the period.
The like-for-like performance was against a first half forecast of -4% to -7%.
“…we expect the consumer environment in the second half to be similar to that of the first half.”
Next said it estimated that the hot weather had lifted retail sales by between 2% and 3%, which puts its first half performance ahead of guidance given in May.
Next Directory sales rose 1.1%.
Total group sales were ahead 1.3%.
Next said it went into its end of season Sale, which began on July 18, with 19% less stock than last year and that initial clearance sales had been encouraging.
However Next remained cautious on second half forecasts, predicting that like-for-like retail sales would be down by between 3.5% and 6.5% but it said that negotiations with suppliers had gone better than expected, which meant gross margin would be ahead of forecasts for the second half. This has led it to add a further £15m to profit forecasts for the second half of the year.
Broker Credit Suisse said it was now forecasting full year profit before tax to come in at around £406m against the previous market consensus of £376m.
Next said in a statement: “We expect consumers to continue to moderate their spending in the second half. Whilst we do not anticipate any collapse in consumer sentiment we believe that many will continue to save rather than spend the benefits of lower mortgage costs. In addition we anticipate that unemployment will continue to rise, though not necessarily at any faster rate than the last six months. As a result we expect the consumer environment in the second half to be similar to that of the first half.”
“The first half benefited significantly from favourable weather comparisons, we would therefore caution against any assumption that the second half Next Retail like-for-like sales will be in line with those of the first half.”