Next shares up 9pc as it weathers poor trading stretch

NEXT shares were given a sunshine boost yesterday as they shot up by 9pc after investors were cheered by better -than-expected quarterly sales after a stretch of dismal trading.

The retailer, which in March reported its first fall in annual profits for eight years, has been struggling with a slump in store sales, rising import costs and intense competition, with its more nimble rivals, such as Zara and Asos, luring shoppers away.

Next still reported a 1.2pc fall in sales over the six months to July 29, but shareholders were reassured by a 0.7pc rise in sales in the second quarter. Analysts had feared a further 3pc sales drop over the last three months.

Simon Wolfson, Next chief executive, said that the improved sales performance was due to better product ranges and the hot weather in June and July. Next’s full-price sales were down 3pc in May, then climbed 3pc in June, and a further 3.9pc in July.

Lord Wolfson said that there had been some improvement in its product ranges, but he added that the retailer was still without some of its bestselling fashion ranges, such as women’s blouses, following buying mistakes earlier in the year. He added that the situation was unlikely to be fixed before September.

There continued to be a big discrepancy between Next’s bricks and mortar shops, where sales fell 7.4pc, and its Directory online business, where sales grew 11.4pc during the second quarter.

The retailer has previously warned that its shop prices will have to rise by about 4pc to cover the rising import costs associated with the fall in the pound. Lord Wolfson said that prices had risen by about 4pc, and he expected another 2pc increase in the spring, adding that the impact of the pound’s drop last year should start to taper off from this autumn.

Next spooked investors in May by lowering its profit targets amid growing concerns about a slowdown in consumer spending. The company yesterday said it expected full-price sales in the second half of the year to be down 1.2pc, while its profit guidance remained unchanged.

Investors were also reassured by an announcement of a 45p special dividend, to be paid in November. Its shares closed up 388p at £44.01.