FTSE 100: Next shares jump after heatwave boosts sales

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Next raised its forecast for full-year profit by £10m to £860m as results. Photo: PA
Next raised its forecast for full-year profit by £10m to £860m as results. Photo: PA (PA)

Next (NXT.L) lifted its full-year sales and profit forecasts after shoppers returned to the high streets thanks to warmer weather in June and July.

Shares in the FTSE 100 (^FTSE) retail company jumped 3.1% in early trade in London on Thursday.

Full price sales rose 5% in the three months to 30 July as a result of the "unusually warm and dry weather". That was up £50m ($60.8m) on previous guidance, and 23.8% higher than in the same period in 2019 before the pandemic.

The return to formal dressing "perhaps driven by pent-up demand for social events such as weddings", which was limited during COVID restrictions, had also played to Next's strengths, it said,

Read more: Jubilee fails to lift retail sales as shoppers tighten purse strings

Next raised its forecast for full-year profit by £10m to £860m, and the retailer now expects full-price sales to rise by around 6.2% in the 2022/2023 year, compared with an earlier guidance of 5%.

But the "stronger than expected sales performance in Q2 is not expected to continue into the second half", the brand added.

Next also warned inflation will hit consumer spending as prices soar and households incomes are squeezed.

It noted that comparing its full price sales performance against 2021 appeared to show that growth online had flattened as trends from the pandemic were reversed.

"But we think that these changes reflect a short-term reversal of pandemic trends, and are unlikely to be indicative of longer-term trends in consumer behaviour," Next said.

Richard Hunter, head of markets at Interactive Investors, said: "A deteriorating UK economy has resulted in several examples of slowing retail sales and, while some of the competition may have been removed over the last few years as smaller retailers have gone to the wall, the propensity of consumers to spend on more discretionary items is likely to drop as the financial pressure on individual spending increases."

Watch: How does inflation affect interest rates?

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