Fashion giant Next reveals sales for the quarter have grown slightly ahead of expectations

The retailer reported that full-price sales were up 0.4 per cent over the 13 weeks to October 29, compared with the same period last year.

It said this included a bounce from sales at the group’s UK and Ireland retail stores, which grew 3.1 per cent over the quarter.

This offset a 1.9 per cent dip in online sales, which failed to keep up with elevated levels boosted by the pandemic last year.

Next told investors it saw improved sales growth in September and October.

The company said: “Full-price sales in the last five weeks have been up 1.4 per cent, boosted by one particularly strong week at the end of September, when temperatures dropped and sales of heavier weight products improved.”

It came after Next cut its guidance in September following weak sales in August as shoppers tightened their belts.

The business said in the previous update that it “seems inevitable” that growth in the clothing and homeware sector “will slow if not reverse” as inflation starts to bite for shoppers.

Prices across the retailer’s autumn and winter range have been increased by 8 per cent as it passes on some of the impact of higher costs to customers.

On Wednesday, Next reaffirmed that it expects to hit its pre-tax profit target of £840m for the current financial year.

Charlie Huggins, Head of Equities at Wealth Club, commented:

"After Next cut its sales and profit forecasts five weeks ago, the fact it's maintaining guidance today comes as a relief. However, this reasonable progress masks considerable weekly volatility. The last week of September shows sales up a stellar 11 per cent, but in the middle of October sales fell by 3.7 per cent.

"An element of sales volatility is to be expected for any retailer, with weather always playing a part. Even so, these are quite large fluctuations and may say something about the fragile state of the economy.

Mr Huggins added: “The uncertain economic backdrop is underlined by Next's caution for the remainder of the year, with the group expecting sales to fall by 2 per cent. Bear in mind that includes perhaps high-single digit price increases, so volumes are quite weak.

"Unfortunately, the worst is probably still to come. Inflationary pressures and higher interest rates will really start to bite next year, especially as home owners come to remortgage.

"Next looks better positioned than most of its peers to weather the storm, in light of its high margins, robust cash flows and strong balance sheet. But 2023 could be a very difficult year the way things are shaping up."

Next can trace its roots back to 1864 when J Hepworth & Son, Gentleman’s Tailors was established in Leeds. In 1981, Hepworth bought the chain of Kendalls rainwear shops to develop a womenswear group of stores called Next.

It continued to expand over the next decade, with Next for Men launching in 1982, followed by the opening of the first department store offering womenswear, menswear and interiors in Regent Street, London in 1985.