KEY POINTS

  • British fashion retailer Next reported an increase of 2.8% in total full-price sales for the 12 weeks ended July 28, 2018.
  • Next reported an increase of 4.5% in full-price sales in the first half.
  • The company stated that an exceptionally hot summer helped it grow sales ahead of expectations in the second quarter. 

2Q18 Trading Update

British fashion retailer Next reported an increase of 2.8% in total full-price sales for the 12 weeks ended July 28, 2018. Next Retail (in-store) full-price sales fell by 5.9% year over year, in contrast to Next Online (formerly Directory) sales which increased by 12.5%. Sales from new space contributed 0.4% of growth during the quarter.

Growth in the quarter was ahead of the company’s guidance, which the company attributed to unusually warm weather in June and July. At the end of 1Q18, the company had guided for full-price sales growth of around 1% for the remainder of the year.

In 1H18, total full-price sales increased by 4.5%, of which 0.4% was due to new space. Next reported a year-over-year increase of 3.9% in total sales, including markdown sales, in 1H18. The end-of-season sale began on July 7, 2018, a week earlier than last year, and was marked by tight control of surplus stock as Next went into the season with around 20% less stock than the previous year. The resulting better-than-expected clearance rates added approximately £4 million to profits.

Outlook

Next maintained the FY18 guidance issued in May 2018, for total full-price sales to be up by 2.2% and for group PBT to decline by 1.3%.

In January 2018, the company announced a £300 million share buyback program to return surplus cash to shareholders. Next confirmed that it has completed the program and expects it to enhance EPS by 4.7% in the current year, yielding year-over-year growth of 3.7% in EPS.

Next reports its first-half results on September 25.


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