Next PLC reported on Wednesday that its first-quarter sales exceeded forecasts and it is maintaining its annual projections, although it anticipates a weaker second quarter ahead.
The company’s shares rose less than 1% in London trading.
In the 13 weeks leading up to April 27, the Leicester, England-based retailer reported that full-price sales increased by 5.7% from the previous year, slightly surpassing the expected 5% rise.
Online full-price sales saw a significant boost of 8.8%, while retail full-price sales remained unchanged.
Next confirmed that its guidance for the fiscal year ending January 27 remains steady, with an expected full-price sales increase of 2.5%. This forecast suggests a slight decline of 0.3% in full-price sales for the second quarter.
The company also anticipates that its total annual group sales, including subsidiary companies and markdown sales, will grow by 6.0% to approximately £6.2 billion.
In addition, annual group pre-tax profits are projected to increase by 4.6% to around £960 million.
“The NXT of old may have been a greater hostage to the unhelpful weather conditions that have emerged in the UK in recent weeks,” analysts at Jefferies commented in a post-earnings note.
“Today's 5.7% Q1 progress should please, and betters the budget for a 5% increase in Q1 full price sales. This is likely consistent with buy-side expectations,” they added.
The potential for stronger discretionary sales in the UK, particularly in fashion, which could better maintain its share of UK consumer spending after many years of decline, coupled with a better recognition of Next's expanding total addressable market (TAM), “should provide attractive earnings and valuation tailwinds,” analysts concluded.