Next to hand back £29m in rates relief as sales soar after lockdown

NEXT is handing back £29m in business rates relief after the easing of lockdown restrictions led to blowout sales.

The High Street fashion store revealed trading had been ‘unexpectedly strong’ since May as shoppers splashed out on summer wardrobes.

This helped push sales beyond even pre-pandemic levels – and prompted Next to hike its profit forecasts for the third time this year. Shares in the firm, which is led by Simon Wolfson, jumped 7.5pc, or 552p, to 7946p.

Following the bumper performance, Next revealed plans to hand back any business rates relief that was received while its stores were open.

‘Our sales during the last 11 weeks have been materially ahead of our expectations and, as a result, we are increasing our profit guidance for the full year,’ a company spokesman said.

During the pandemic, many retailers have seen sales at their physical stores hammered by lockdown restrictions which have forced them to remain shut for long periods.

Those that have successful online operations – including Next – have managed to boost sales via the internet but the closure of bricks-and-mortar stores has still proved costly.

Under the Government’s road map for lifting lockdown restrictions, ‘non-essential’ shops such as clothing stores were allowed to reopen in April.

And Next said customers have splashed the cash since then, with sales up 20.8pc over the 11 weeks to July 17 compared to the same period in 2019. That included a 44pc rise in online sales and a 6pc drop at physical stores, Next said.

The firm said ‘pent-up demand’ from customers who have made relatively few summer purchases in the past 18 months had contributed to the ‘exceptionally strong’ performance, as well as hot weather in May and June.

Next said it did not expect this level of trading to continue but it is more optimistic, with sales in the second half expected to be stronger than previously forecast. As a result, the firm has lifted its full-year profit forecast by £30m to £750m. This will result in ‘surplus cash’ of £240m, which Next said it would hand to shareholders via special dividends, the first of which will be paid in September.

The strong results were echoed by a survey by accountants BDO, reporting a ‘euphoric’ reopening for many retailers in April.

Sophie Michael, head of retail and wholesale at BDO, said it showed a ‘shift in the consumer mindset’.

She said it was hoped that more recent easing of restrictions would unleash a ‘further wave of spending’.