Thanks to strong fashion sales, Next reports that its Q1 was "better than expected" – in the 13 weeks to 26th April, the retailer's full-price sales were up +11.4% YoY, +£55m ahead of the forecasted +6.5%.
"We believe much of the over-performance in the first quarter has been the result of warmer weather, which has benefited the sale of summer-weight clothing," the retailer explains. "It is likely that some of these sales have been pulled forward from Q2. So, despite the strength of Q1, we are not increasing our sales guidance for Q2, or the rest of the year.
"In addition, we believe that the full effects of this April’s National Insurance increases will begin to filter through to the wider economy in the second half."
Accounting for the £55m of additional sales in Q1, Next is, however, increasing its guidance for Next Group's PBT for the full year by +£14m to £1080m.
Performance in both the UK and overseas was better than anticipated, Next continues: "Sales in our retail shops have been much stronger than we expected but, in our experience, shops benefit disproportionately from the favourable weather. So we are expecting our retail sales to return to being broadly flat for the rest of the year."
Commenting, Julie Palmer, partner at Begbies Traynor, says: “Next has once again beaten expectations, delivering another strong performance despite the pressures facing the wider retail sector. The warm weather through the spring months certainly helped, but that shouldn’t detract from Next’s impressive ability to deliver consistently across both in-store and online.
“In spite of the positives, the retailer’s caution over the coming months is telling. After a very healthy first quarter, the retail giant has maintained sales guidance for Q2 and only nudged up PBT guidance for the full year by £14m.
“In an environment where headwinds are gathering, everyone is feeling cautious. UK consumer confidence is at its lowest since 2022, with persistent cost pressures and US tariffs adding to the uncertainty. Next’s scale gives it an advantage, but sustaining this level of outperformance will be harder if conditions worsen. That said, Next has under-promised and over-delivered for years so there's plenty of scope for more surprises to the upside at the next update.”
