Next Plc’s sales fell by less than expected in the first quarter as cash-strapped shoppers juggled rising fashion prices and household bills.
(Bloomberg) — Next Plc’s sales fell by less than expected in the first quarter as cash-strapped shoppers juggled rising fashion prices and household bills.
The British clothing and housewares chain said full price sales fell 0.7% at the start of the year, in a statement Thursday. The shares rose as much as 2% in early trading.
Although the drop in sales was smaller than forecast, Next maintained a bearish outlook and said sales could likely fall by as much as 5% in the second quarter, partly due to colder weather and less demand for weddings and other events.
Britain’s cost-of-living crisis shows little sign of easing and shoppers are having to grapple with higher food, rent, mortgage and energy bills. The retailer, which has been pushing up the prices of its clothes to help offset higher input costs, is considered a bellwether for the UK retail sector as it has hundreds of stores and a successful website.
What Bloomberg Intelligence Says:
“Next’s maintained £795 million pretax profit guidance speaks to cost discipline, with sales expected to drop again in 2Q as consumers don’t repeat 2022’s end-of-lockdown splurge on occasion dressing. The balance between shops and online, including the expanding marketplace, keep Next well-positioned to match consumer spending patterns, with the focus on full-price sales ensuring value credentials are maintained.”
— Charles Allen BI retail industry analyst
Next’s Sales Prudence Underpins Maintained Profit Goal: React
Inflation is still rising for British shoppers with grocery bills accelerating at a record rate of 15.7%, the British Retail Consortium said earlier this week.
Home improvement retailer Wickes Group Plc also reported a drop in like-for-like sales this week, citing the impact of adverse weather particularly denting sales of garden products.
Next has benefited from snapping up weaker rivals during the inflation crisis. Earlier this year the retailer bought fashion and homeware brand Cath Kidston out of insolvency and last year it purchased fashion chain Joules and furniture brand Made.com.
(Updates with share move in second graph and analyst quote)
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