May 10, 2018

Hot weather prompts warmer profits outlook from Next

British retail chain Next has upgraded its full-year profit forecasts after it sold more goods than expected in the first quarter because of unseasonably warm weather. The group, whose chief executive Simon Wolfson is known for guiding investors towards conservative assumptions for future performance and then surprising on the upside, also lifted its profit forecasts for the year to £705m to £717m. In March, Mr Wolfson pronounced 2017 was "The most challenging year" that the of British high street bellwether has had in 25 years while reporting an 8 per cent decline in annual retail sales. This year full year sales are now expected to grow by 2.2 per cent, Next said on Thursday. Next's positive outlook contrasts with that of many other high street retailers, many of whom have been closing stores, warning on profits and entering into agreements with landlords to escape leases and cut their rent bills. UK retail sales dropped by a record 4.2 per cent in April compared with the same month last year, according to the BRC. The downturn has prompted a number of high street names, including Carpetright, House of Fraser and New Look and restaurant groups such as Prezzo and Jamie's Italian strike creditors' voluntary arrangements with their landlords so they can exit shops that are no longer profitable.

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