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UPDATE 2-UK's Next lifts profit view as sales fall less than feared

Wed, 29th Jul 2020 07:28

* Q2 sales -28% vs former best-case forecast of -50%

* Sees full-year pretax profit of about 195 mln stg

* Childrenswear, homewear sells well

* Shares jump as much as 10%
(Adds CEO comments, shares)

By Paul Sandle

LONDON, July 29 (Reuters) - Fashion retailer Next
raised its profit forecast on Wednesday after sales fell less
than feared over the past three months as Britain emerged from a
coronavirus lockdown.

Shares in the company jumped as much as 10% after it
forecast full-year profit of about 195 million pounds ($252
million). That was up from its guidance range in April of
between a 150 million pound profit and a 150 million pound loss.

Sales fell 28% in the quarter to July 25, against the 50%
drop forecast in April.

"The stores opened better than we thought; they were still
obviously down a long way (...) but we were expecting them to be
down as much as they were in the week going into lockdown,"
Chief Executive Simon Wolfson told Reuters in an interview.

"And we managed to build back our warehouse capacity much
faster than we had anticipated we would be able to do."

Online sales bounced back as warehouses returned to normal,
with sales up 9%, helped by much lower returns on the categories
that were selling well - childrenswear, home and casual clothes
- than on items less in demand, such as dresses and formal wear.

Like-for-like sales in Next stores, the bulk of which
re-opened in June, were down 72% in the quarter, and down 32%
since June 15.

Wolfson said stores in retail parks where it was easy to
socially distance were performing much better than those on high
streets and in shopping centres, reflecting lower footfall in
city centres and less use of public transport.

Next still has about 12% of staff on furlough, Wolfson said,
but he expects all of them to return by November. He said the
company was not planning job cuts beyond a small number already
announced at head office.

($1 = 0.7739 pounds)
(Reporting by Paul Sandle; editing by Guy Faulconbridge and
Mark Potter)

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