UK retailer Next Plc has published a set of muted Q1 results and while it expects a stronger second quarter, it is maintaining its full-year outlook on the basis it is too early to say how the remainder of the year will play out.
In the 13 weeks to 29 April, Next recorded a 0.7% fall in full-price sales.
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Online sales fell 1.6% year on year, while retail sales fell 0.6%.
Next has forecast a 1.5% decline in 2023-24 full-price sales and pre-tax profit of £795.
“Although our first quarter performance moderately exceeded our sales guidance, we believe it is too early in the year to alter our overall sales expectations for either the half or full year,” the retailer said in a stock exchange filing.
“To maintain our first-half forecast, we have moderated our sales forecast for the second quarter, which is now planned to be -5% down on last year (previous guidance was -4%). This adjustment seems reasonable, as some of the first quarter’s success, particularly in holiday clothing sales leading up to Easter, might have been pulled forward from the second quarter.
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By GlobalData“Shareholders might wonder why we are so cautious for sales in Q2. As we explained in March, the second quarter last year benefited from unusually warm weather and pent-up demand for events such as weddings, proms etc.”
Analyst reaction to Next Q1 numbers
Emily Salter, lead retail analyst at GlobalData, comments: “Despite Next’s resilience, it will have underperformed the total clothing & footwear market, which GlobalData forecasts to have grown by around 7% in the three months to the end of April. Although Next’s wide range of products and brands and market-leading online proposition have aided its fortunes, its performance has not been as strong as the likes of sportswear players and those that have still been recovering from the pandemic, such as Primark, which has also benefitted from its value proposition.
“At the end of April, Next announced that the launch of Joules on its total platform will be significantly faster than anticipated, with it now being able to launch in October 2023, instead of March 2024. This accelerated onboarding may mean that Next is more likely to take on more clients and potentially acquire more distressed retailers.
“However, the retailer should be careful not to lose focus on its existing proposition, especially as it tries to place greater emphasis on the Next own brand to grow its market share in underdeveloped areas like women’s clothing and home. To do so, it will have to make investments such as increasing instore space for home and promoting good value for money while investing in trends in its womenswear, especially as key rival Marks & Spencer has significantly improved its reputation in both aspects in the past few years.”
