Fashion giant Next put rival Marks & Spencer in the shade again today as chief executive Simon Wolfson raised its profit forecast following a strong quarter.
While M&S struggles with poor sales, the sudden loss of its finance director and increased grumbles over the leadership of Marc Bolland, Next has made hay in the sunshine, lifting its profit forecasts by £25 million to between £775 million and £815 million.
Next’s shares, up 140p to 6660p on the back of the upgrade, have added 23 per cent since the beginning of 2014, compared with a miserly 2 per cent advance for M&S.
It has also handed back £328 million to investors through special dividends and buybacks this year.
“This summer has been quite a good summer for clothing retail in that it has been warm. The weather has been on our side for the last four or five months,” said Wolfson.
Group sales are ahead of Next’s April guidance of between 5.5 per cent and 9.5 per cent and the retailer also upped its sales range for the year to between 7 per cent and 10 per cent.
Next has been flattered by trading comparisons with last year’s much colder weather and Wolfson expects the going to get tougher as the financial year progresses.
The hotter temperatures this year have also meant less pressure on clothing retailers to slash prices across the board, pushing up the nation’s overall inflation rate to 1.9 per cent in June and dampening official retail sales figures.
Despite the economy picking up strongly, Wolfson is cautious over the financial health of British shoppers.
He said: “My sense is that the consumer is OK but we are by no means in a boom situation. While people have stopped feeling poorer after five or six years, I’m not sure people are feeling a lot richer.”
Next’s second-quarter sales were up 10.7 per cent, including an 18.8 per cent increase in sales from the Directory online and catalogue business and a 6.4 per cent increase in High Street takings.
Peel Hunt analyst John Stevenson said Next’s rivals will face a tough job keeping up with Wolfson’s retail machine. He said: “While underlying apparel markets have been strong, Next is taking market share and we struggle to see M&S or Debenhams matching this level of performance.”