Next gets sales lift from sunny weather and M&S disruption

Next has reported bumper sales between May and July as sunnier UK weather and a disruptive hack at its rival Marks & Spencer sent customers flocking to the clothes and homewares retailer.

Full-price sales at Next in the 13 weeks to 26 July rose by 10.5%, compared with the same period last year, which was £49m ahead of its guidance forecast of a 6.5% rise in takings.

“In the UK, we believe that the over-performance was largely due to better than expected weather and trading disruption at a major competitor,” Next said, referring to the damaging cyber-attack that forced M&S to pause online customer orders for almost seven weeks and led to some shortages in stores.

Next said its international sales also grew faster than expected, which it chalked up to a digital marketing strategy that had “proved more effective than anticipated”.

The figures solidify Next’s winning streak after the retailer reported in March it had surpassed £1bn in annual profit for the first time. While the group sells clothes and homeware under its Next brand, it also controls the UK distribution of the US brands Gap and Victoria’s Secret, creates Laura Ashley homewares, Ted Baker childrenswear and lingerie, and sells dozens of other brands it does not own via its website.

The retail group, which is headed by the Conservative peer Simon Wolfson, said it was now raising its forecast for growth in full-price sales in the second half of the year to 4.5%, up from 3.5% previously, which was expected to result in an extra £27m in sales for the group.

This was primarily due to stronger than expected performance at its international operations after the marketing successes. Next said it was not raising guidance for the UK, where sales were expected to slow in the second half of the year to a growth rate of 1.9%, versus 7.6% in the first half.

The retailer said this was partly due to the UK’s hike in employer national insurance contributions, which it said were expected to “continuing to filter through the economy” and would “dampen consumer spending as the year progresses”.

It added that it was unlikely to experience any continued benefit from good UK weather and the disruption at M&S. “We do not expect either of these factors to have a material effect in the second half and so we are not increasing our guidance for UK sales,” Next said.

Shares in Next dipped by 1% in morning trading on Thursday, but were still up more than 25% so far this year.