Next shares up thanks to heatwave

Warm weather adds £12m to profits

SHARES in Next Plc jumped almost 7 per cent on news that the business benefited from the spring heatwave.

The share price was hovering around £56 yesterday after the Enderby high street giant upgraded its annual profits forecast.

Next said unusually warm weather over the past couple of weeks had resulted in a “sales over-performance” which will add about £12 million to its fullyear profits.

In a trading update for the 14 weeks to May 7, the business said full-price sales rose 6 per cent in the period, with online sales up 18 per cent.

The update said: “Sales in the first quarter were better than we expected and about £40 million ahead of our internal forecast, boosted in recent weeks by unusually warm weather.

“This sales over-performance adds about £12 million to our fullyear profit and we are therefore increasing our central guidance for group profit accordingly.”

The business now anticipates full year profits of £717 million, up 2.2 per cent.

However, the figures also showed sales at its high street stores were down 4.8 per cent, reflecting the wider malaise in the retail sector.

In March Next revealed that profits from its high street and out-of-town stores were down almost a quarter.

Profits from its bricks and mortar shops were £268.7 million in the year to the end of January, down from

£353.3 in 2016. Overall, pre-tax profits were down more than 8 per cent, to £726.1 million last year.

However, the business continued to benefit from growing online demand for its clothes, where profits rose 7.4 per cent last year, to £461.2 million.

Richard Lim, of Retail Economics, said while the results were better than expected, they should be put in the context of a “soft benchmark” from the previous year.

“The story of continuous structural challenges underlies the narrative for these results,” he said.

“In-store sales continued to spiral downwards, indicating the relentless shift towards online shopping.

“This reflects the real challenge for many high street retailers which are oversupplied with physical space while consumers increasingly spend both their time and money away from traditional high streets.”

The retail sector has been hammered by rising costs and falling consumer confidence, which has contributed to hundreds of store closures this year.

The overall results will come as welcome relief to Next boss Lord Simon Wolfson.

In March, he described 2017 as the toughest year in more than two decades as the retail giant posted a second consecutive fall in annual profits.

At the time, Next pointed to “product ranging errors and omissions” as contributing to the poor showing – a result of the business failing to provide customers with key items, as well as the shift away from consumer spending on clothing.