Better weather helps Next lift first half profit guidance

High street clothing and home furnishings retailer, Next plc, reported better than expected profits and margins for the first half of 2009, largely thanks to good weather which lifted sales of its summer lines.

The FTSE 100 constituent brought forward its trading update by one week after its End of Season Sale saw better than anticipated clearance rates.

For the 25 weeks to 18 July, Next reported that total retail sales excluding Value Added Tax (VAT) climbed 1.4%. Like for like sales excluding VAT for the group’s 394 stores fell 1.9%. Next Director and Next Brand sales both climbed 1.1% and 1.3% respectively.

“Sales of summer clothing have benefited from much better weather than last year,” the company stated. “We estimate that the warm temperatures have improved these Next Retail sales by between 2% and 3%.”

As a result of the better sales, Next increased its first half profit guidance by £15 million, and also increased its second half profit guidance by the same figure, as it expects second half margins to be ahead of expectations.

Looking ahead, Next maintained its cautious stance, warning investors not to assume the second half performance would be as good as the first half.

“We expect consumers to continue to moderate their spending in the second half. Whilst we do not anticipate any collapse in consumer sentiment we believe that many will continue to save rather than spend the benefits of lower mortgage costs.”

www.proactiveinvestors.co.uk