Next sales edge higher in tough UK market

LONDON - Next, Britain's second-biggest clothing retailer, met forecasts for quarterly sales, with a weak performance from its stores offset by strong trading at its Directory home shopping business.


Next's Highcross Leicester store / Photo: Next


Next said on Wednesday total sales were up 1.4 percent in the 13 weeks to April 28, its first quarter. That compared with a forecasts in a range for 0-2 percent in a Reuters poll.

Retail sales fell 3.9 percent, versus forecasts in a range of flat to down 5 percent, while sales at its Directory online and catalogue business were up 11.8 percent versus forecasts of a 10-15 percent rise.

Next's stores were up against tough comparative numbers as last year's first quarter was boosted by an exceptionally warm Easter and a Royal Wedding. Second-quarter comparatives are less demanding.

"There has been little change in our product costs, gross margins or selling prices in the first quarter and we expect this to continue into the second quarter," it said.

Next maintained guidance issued in March and said first-half profit should be ahead of last year.

It is budgeting for total sales to be up 1-4 percent in its first half, with retail sales in a range of flat to down 3 percent, and Directory sales up 9-12 percent.

It is also budgeting for 2011/12 sales growth of 1-4 percent and a pretax profit of 560-610 million pounds.

Next said it now expected earnings per share to rise 6 percent, up from previous guidance of 5 percent.

Many retailers are struggling as consumers grapple with higher prices, muted wage growth and government austerity measures, and worry about job security, a stagnant housing market and fallout from the euro zone debt crisis.

Next has generally defied the gloom, helped by its strong online offer and new store openings.

Its shares increased by nearly a third in value over the past year, though they did fall last month after chief executive Simon Wolfson sold 3.8 million pounds of stock.

The shares closed at 2,929 pence on Tuesday, valuing the business at 4.9 billion pounds.

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