Next Sales Surge Even as Inflation Weighs on U.K. Shoppers
Next Sales Surge Even as Inflation Weighs on Shoppers
(Bloomberg) -- Next Plc said store sales soared in the first quarter as they stayed open following the end of pandemic restrictions, even as inflation squeezes shoppers’ disposable income.
The British clothing and housewares chain said sales jumped by 285% in a strong start as it reiterated that it expects annual pretax profit of 850 million pounds ($1.07 billion) in the year through January, in a statement Thursday.
Full-price sales also rose 21% despite the promotional environment which earlier this week saw Joules, a smaller retail rival, warn on profits. Although online sales fell in the period, compared to last year when people locked down at home splurged on the internet, they are still up on pre-pandemic levels.
Shares in Next rose more than 3% in early trading in London Thursday.
Next went into the pandemic warning that it presented the global retail industry with its biggest threat in nearly half a century but emerged a winner as consumers shopped online and stores bounced back from forced closures. The retailer, often considered a bellwether for the health of Britain’s main streets, tends to be cautious typically and lowered its profit and sales guidance in March as the war in Ukraine and record inflation in the U.K. dimmed its outlook.
The chain has closed its websites in Ukraine and Russia and overseas full price sales are currently down 7% from the same time last year. In March, Next warned that sales were very hard to forecast given growing inflation and changing shopping habits with consumers less likely to spend on clothes as they grappled with surging gasoline and energy bills.
Next operates hundreds of stores across the U.K. and a large domestic and international online division selling its own range of fashion, as well as third-party brands. It also uses its infrastructure network to help rival brands sell their goods online.
The chain has been acquisitive recently and agreed to acquire baby goods retailer JoJo Maman Bebe last month for 16 million pounds alongside U.S. hedge fund Davidson Kempner Capital Management.
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