Next shrugs off inflation fears as sales bask in the summer sun

NEXT received a surprise sales boost from the return of weddings and the early summer heatwave.

The fashion retailer said shoppers flocked back to stores for dresses, and party and formal clothing to celebrate the end of lockdowns.

It had expected sales to be flat but they popped 5pc on the back of the unusually hot weather in June and July. It meant overall sales came in £50m higher in the first half of the year than its previous guidance.

Next also upped its profit forecast for the year by £10m to £860m on the back of the ‘pent up demand’ for social events.

The retailer has benefited in recent years from the demise of Debenhams and Topshop. Shore Capital retail analyst Eleonora Dani said it was ‘reassuring’ to see Next post the bumper results after a series of profit warnings in the sector.

But the retailer warned the stronger than expected performance would not run into the second half of the year, and sales growth will slow to just 1pc.

Next boss Lord Wolfson said: ‘We are not expecting a catastrophe, but we have moderated our expectations as inflation bites.’

AJ Bell investment director Russ Mould was impressed, describing Next – with 498 shops and 21,600 staff – as a ‘best in class’ retailer.

The trading update comes months after Wolfson warned customers face higher prices because of soaring freight costs, wages and energy bills. Prices in stores and online went up by 3.7pc in the first half of the year, and are expected to jump 8pc in the second half.

He also warned yesterday that tax cuts will not solve the challenges facing the economy.

The Tory peer said inflationary pressures that are eating away at household earnings can only be tackled by increasing the supply of goods and workers.

Aside from helping the poorest, he said there is ‘nothing the Government can do’ for the vast majority of families and that ‘printing money’ would do little to help the situation.