Next lifts guidance after smaller End of Season Sale

High Street clothing and homeware retailer Next met sales guidance in the first half but has raised its profit forecasts for the full year after a strong trading performance ahead of its End of Season Sale.Nevertheless, Next did warn about sales volatility as consumers become more "spontaneous in their purchasing habits". Total Next Brand sales rose 2.3% in the 26 weeks to July 27th, in line with the guidance for a 1-4% increase. Growth was helped by strong full-price sales and a much smaller End of Season Sale. "We went into Sale with 20% less stock than last year, clearance rates improved and markdown sales were down only 13%."Next is maintaining its guidance for 1-4% sales growth in the second half and predicts that full-year sales should grow by 1.5-3.5%.The strong full-price sales, reduction in residual stock and lower markdowns added £10m to the company's bottom line in the first half. As such, Next now forecasts a profit before tax of £635-675m this year, ahead of the previous £615-665m guidance. This would represent growth of 2.2-8.6% year-on-year.As for sales volatility, the firm said that weekly sales are being affected by short-term events such as changes in weather, the timing of Bank Holidays and school holidays."We do not believe increased volatility has much effect on overall spending, but it does mean short-term consumer trends are harder to read.  Investors should be wary of drawing conclusions from sales information relating to short periods of time," the firm said.BC