Next boosts outlook after robust first quarter

(Sharecast News) - Retailer Next lifted full-year guidance on Wednesday after first-quarter sales beat forecasts, boosted by unusually warm weather.

Full-price sales jumped 6.2% in the 13 weeks to 2 May - comfortably ahead of expectations for a 4% uplift - adding an extra £8m to profits.

The high street bellwether said the first five weeks had been particularly strong, with sales surging 11.8% on the back of unusually warm weather. The outbreak of war in the Middle East then led to "considerable disruption" to service in the region, hitting international sales mid-quarter. However, trade in the last four weeks had started to recover, Next confirmed.

As a result, the blue chip left guidance for full-year sales unchanged at £5.9bn, but raised its outlook for pre-tax profits to £1.218bn from £1.210bn. Post-tax earnings per share guidance was increased to 792.9p from 787.3p.

Next also raised full-year forecasts for costs associated with the Middle East war, from £15m to £47m, on the back of higher fuel prices as well as disruption at factories and across global transport networks. However, it said price rises in most international markets would mitigate much of the impact, along with cost savings and margin gains in the UK.

"Based on our current estimates, we do not anticipate increasing our UK prices over and above the 0.6% we had forecast at the beginning of the year," Next noted.

The chain's next trading update, which will cover interim sales, is slated for 5 August.

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