In the 13 weeks to 25th October, full-price sales at Next were up 10.5% YoY, £76m ahead of the retailer's previous guidance for the period, of +4.5%.
Sales overperformed in both the UK and overseas. UK sales were up 5.4% YoY (lower than the +7.6% growth the retailer achieved in H1, but ahead of its guidance of +1.9%), while overseas sales were up 38.8%.
The retailer is now increasing its guidance for full price sales in Q4 from +4.5% to +7.0%, adding a further £36m of full-price sales to its forecast.
The increase in sales in Q3, along with this improved sales guidance for Q4, means Next is increasing its full-year guidance for PBT by £30m, to £1,135m.
"As expected, sales growth in the UK weakened in comparison to the exceptional performance achieved in H1," says Next. "As a reminder, our UK sales performance in the first half benefitted from favourable weather conditions and competitor disruption. Nonetheless, UK growth of +5.4% was stronger than we had expected. In hindsight, we think we underestimated the positive effect of improved stock levels this year. Last year, stock deliveries were delayed by disruption in Bangladesh and constraints in global freight capacity."
Next is upgrading its sales guidance for the final quarter from +4.5% to +7.0%. In the UK, Next expects sales growth to "continue to moderate", slowing from +5.4% in Q3, to +4.1% in Q4.
Guidance for total group sales has increased by £150m – £38m more than the increase in Next full price sales. "£23m of this increase comes from the timing of markdown sales," Next explains. "This season, we placed more of our surplus stock into our mid-season sale in September rather than our Christmas sale. This stock therefore has longer to sell during this financial year than the equivalent sale stock last year. We expect total surplus stock in the second half to be up around 3.5%. The remaining £15m comes mainly from additional clearance sales."
Commenting on the latest results, Julie Palmer, a partner at Begbies Traynor, says: “Next has once again proven why it’s the gold standard in UK retail. With guidance lifted and healthy sales growth both at home and abroad, the retail giant’s winning formula of tight cost control, effective stock management and a well-balanced online and store offer is clearly paying off.
“At a time when many retailers are feeling the squeeze from rising costs, weak consumer confidence and uncertainty around the next Budget, Next appears largely immune to such pressures. Instead, with a growing international presence and consistently strong UK performance, the FTSE 100 retailer remains firmly on a winning streak. For now, it’s hard to see what could knock it off course.”
