Next boss warns another sizzling heatwave could impact on sales
Chief executive Lord Simon Wolfson said the weather will ‘begin to work against us’ if the heatwave returns throughout August.
Surging demand for summer clothing in the recent heatwave helped Next grow sales, but the chain’s boss warned the return of soaring temperatures will start to hit trade.
The group saw sales rise 2.8% in its second quarter to July 28, with a 12.5% jump in online sales offsetting a 5.9% fall across its high street stores.
Next thanked the “prolonged” hot weather throughout June and July for the better-than-expected sales boost.
But chief executive Lord Simon Wolfson told the Press Association more hot weather will “begin to work against us”, while he added some of its second quarter boost merely saw sales brought forward from August.
The group kept its full-year profit guidance unchanged as a result, sending shares down 6%.
Lord Wolfson said: “People stop buying summer clothes at the end of summer, because they know you haven’t got long to go until autumn.
“The weather will begin to work against us now.
“You’ve sold a lot of your summer stock already – if you sold it in June and July, you haven’t got it available in August.
“We are convinced that some of the over-achievement in the quarter came from August and September,” he added.
He also said the consumer mood is set to remain “subdued” over the rest of 2018.
The group had already increased its annual profit outlook in May after early summer warm weather gave first quarter sales a fillip.
Next said full-price sales rose 4.5% overall in the half-year, with a 5.3% fall in stores and 15.5% growth online.
If the best summer in years isn't enough to upgrade profits, then what is? George Salmon, equity analyst
Full-price sales leapt nearly a quarter higher in one week last month, but trading was volatile throughout the quarter, according to Next.
It launched its end-of-season discount sale a week earlier than in 2017, with 20% less stock after tight management in the first half.
Clearance rates were better than expected and added around £4 million to profit, although the group said this was largely offset by higher warehouse and distribution costs.
Including discounted and full-price sales, Next posted overall sales growth of 3.9% for the first half.
Next is pencilling in full-year profits of £717 million, down 1.3% on the previous year.
It expects full-price sales to rise 2.2% over 2018-19.
George Salmon, an equity analyst at Hargreaves Lansdown, said: “Hopes had been high that the sunny weather, which boosts sales of all things summer season, would have led to Next upgrading profit expectations for the year.
“That’s not been the case. Next says it’d rather wait and see how the remainder of the summer goes before moving guidance.
“This seems fair enough, but it will have left a few wondering: if the best summer in years isn’t enough to upgrade profits, then what is?”