Next improves but still cautious for Christmas
RETAIL giant Next has improved its full- year earnings outlook for the second time in as many months after strong recent trading – but said new coronavirus restrictions could hamper Christmas sales.
Chief executive Lord Wolfson said despite a recent surge in summer sales, he was cautious about the rest of the year as the Government’s Coronavirus Job Retention Scheme ends and social gatherings are limited.
He said the “rule of six”, capping indoor and outdoor social gatherings to six people, was “likely to depress demand for gifts and clothing associated with traditional Christmas family get- togethers”.
While full- price sales plunged 33 per cent in its first half, Next said trading since the lockdown has proved resilient thanks to a strong performance online as sales have risen four per cent in the past seven weeks.
The fashion chain said it expects fullyear underlying pre- tax profits of £ 300million – down heavily on the £ 729million of the previous year but up from the £ 195million previously predicted in July. Shares rose three per cent.
Lord Wolfson said the most recent sales surge is unlikely to be maintained, having been boosted by cooler weather and as fewer Britons travelled abroad.
He said: “There’s all sorts of reasons why people should be cautious about these numbers – we’re not expecting the rest of the season to carry on like that.”
The group still expects sales to plunge 12 per cent for the rest of its financial year as the furlough scheme comes to an end on October 31 and amid fears of a second wave of the virus.
The group also revealed it has set aside £ 20million for bad debts.
It is braced for a rise in customers on credit falling behind as furloughing winds down.