Next shares soared on Thursday after the retailer revealed stronger-than-expected performance despite tough comparables after strong summer trading last year.
Next is the gift that keeps on giving to investors. The company reported a 3.2% increase in full price sales compared to the same period last year, surpassing its own forecast by £42 million.
“Next has a reputation for under-promising and over-delivering and it’s delivered the goods once again. The retailer had low expectations for summer 2024 as beating last year’s strong performance was always going to be a tough challenge,” said Russ Mould, investment director at AJ Bell.
“While the first half of 2024 has been truly miserable for the UK retail sector thanks to unfavourable weather, the end of June perked up and much of July has had glorious sunshine. That’s encouraged people to get out of the house and into the shops.
“Next has once again grabbed a slice of consumer spending, helping to make up for a challenging time earlier this year.”
Next shares were 8.28% higher at the time of writing.
For the first half of 2024, NEXT’s full price sales grew by 4.4%, significantly outperforming the company’s initial guidance of 2.5%. Total Group sales, which include markdown sales, subsidiaries, and investments, saw an even more robust increase of 8.0% in the same period.
In response to these positive results, NEXT has raised its full-year profit guidance by £20 million to £980 million, representing a 6.7% increase compared to the previous year.
The company’s online division performed particularly well, with overseas online sales showing impressive growth of 21.9% in the second quarter. However, retail sales experienced a decline of 4.7% in the same period, reflecting the ongoing shift in consumer shopping habits towards digital channels.
Next’s financial services arm also contributed positively, with finance interest income growing by 3.3% in the second quarter and 4.9% in the first half of the year.
For the full year 2024/25, Next forecasts total Group sales, including markdown, subsidiaries, and investments, to reach £6.2 billion, representing a 6.0% increase from the previous year. The company expects its pre-tax earnings per share to grow by 8.1% to 818.8p.
These projections reflect Next’s strategic acquisitions, including the purchase of 97% of FatFace in October 2023 and an increased stake in Reiss from 51% to 72% in September 2023. These moves have contributed to the company’s overall growth trajectory and diversified its portfolio.