Next raises profit guidance after stronger-than-expected summer sales

It comes after the firm told shareholders in June that it had seen better-than-expected sales as it benefited from “exceptionally warm weather”.

Next said full-price sales over the six weeks since the previous update grew by 3.7 per cent against the previous year, taking in £16m more in sales than expected.

Nevertheless, it represented a slowdown from the start of the quarter amid damper weather last month. The retailer said strong sales over the past quarter included a 10 per cent jump in online trade with a 2.2 per cent increase for stores.

It also reported that its end-of-season sale “has gone well” and said it cleared more stock than expected. As a result, Next increased its pre-tax profit guidance for the current financial year by £10m to £845m.

Despite the improved performance, Next held its sales forecast of 0.5 per cent growth for the second half of the financial year. It said this would put the firm on track for a 1.8 per cent increase for the year as a whole.

Jefferies analyst James Grzinic said: “This self-evidently assumes a reducing willingness by consumers to spend their improving disposable income.”

Richard Hunter, Head of Markets at interactive investor, commented: “Next has raised its full-year forecast yet again, with the latest boost following a successful end-of-season sale.

"The unscheduled trading update in June was due to a material improvement in expected performance which the group attributed to improved weather and the relative impact of annual salary increases. In turn, the additional revenues resulted in Next raising its estimated pre-tax profit for the year by £40m to £835m.

Mr Hunter added: “ Further out and beyond the terms of this trading update, Next is seeing the benefit of its more recent acquisitions and third party operations, where the strands of growth are split into the four areas of its total platform, investment and acquisitions, new brands and third party licences and overseas expansion.

"These lower margin, lower risk third party operations are ripe for expansion and the technology is already in place. The full contribution of these units is yet to be seen, while the general retail arena remains one of fierce competition, especially in pricing.

"Investors have tended to be cautious on Next’s prospects despite the company being generally regarded as a well-oiled machine, and over the last year the share price has risen by just 2 per cent, as compared to a rise of 1.6 per cent for the wider FTSE100.

"The market consensus of the shares as a strong hold has long been in place, suggesting that the market still awaits – and indeed expects – Next to reach its full potential in due course.”