Next Online Strength Drives 17% Sales Increase in Last Quarter

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A woman walks under the ad outside a branch of clothing retailer Next in London, Britain on September 30, 2014. REUTERS / Andrew Winning

  • Third quarter full-price sales beat expectations
  • Fourth quarter sales and full year profit guidance maintained
  • Next expects sales growth to slow
  • The stock drops 3.1% at 08:37 GMT

LONDON, Nov. 3 (Reuters) – UK clothing retailer Next (NXT.L) beat forecast with a 17% increase in full-price sales in the third quarter from 2019, before the pandemic disrupted trade , but maintained his full-year profit forecast as he expects sales growth to slow.

The lack of an earnings upgrade after four already this year caused Next shares to fall 3.1% on Wednesday at 08:37 GMT, reducing year-on-year gains to 41%. The stock hit an all-time high in September.

Next, which trades in around 500 stores and online, said the impact of pent-up pandemic demand is likely to continue to diminish.

It said inventory availability had improved since September but remained “difficult” as delays in its international supply chain were compounded by labor shortages in the transportation and warehousing networks of the country. UK. Read more

Next said that to date, inventory restraints have been offset by strong underlying demand.

“Although consumer finances are healthy, increases in the prices of essential goods (like fuel) could moderate the demand for more discretionary purchases,” he added.

Next reported in September that full-price sales in the first eight weeks of its fiscal third quarter were up 20%. Read more

He said on Wednesday they had risen 14% in the last five weeks of the period up to October 30. This was ahead of his 10% growth forecast.

Online sales in the third quarter increased 40%, while store sales in the UK and Ireland fell 6.1%.

However, Next kept its forecast for full-price fourth quarter sales up 10% from 2019-20 and for pre-tax profit of 800 million pounds ($ 1.1 billion), up 6 , 9% from 2019-20.

“We don’t expect sales to continue at the level seen in the third quarter,” he said.

Next has proven to be a resilient player during the pandemic, benefiting from its long-established online operations.

Competitors with weaker or no online business, notably Primark (ABF.L), saw a sharp drop in sales. Others, like Topshop owner Arcadia and Debenhams have gone bankrupt.

“Next … looks more and more like one of the big winners, adjusting better than most to changes in consumer buying habits,” said Zoe Gillespie, investment manager at Brewin Dolphin.

Separately, on Wednesday, German online fashion retailer Zalando (ZALG.DE) reported declining quarterly profits as it offered discounts to try to keep customers in their online purchases.

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Reporting by James Davey, editing by Emelia Sithole-Matarise and Mark Potter

Our Standards: The Thomson Reuters Trust Principles.


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