Next third-quarter sales rise, full-year guidance backed

Next posted a rise in third-quarter full price sales on Wednesday as the retailer backed its guidance for 2020 but said the improvement it saw in October is not expected to continue for the rest of the year.

In an update for the quarter to 26 October, Next said full price sales rose 2% on the previous year, which was slightly ahead of the guidance it gave in September. For the year to date, full price sales were up 3.5%.

Retail sales fell 6.3% in the third quarter, but online sales were up 9.7% and product full price sales grew 1.6%.

The company backed its guidance for annual full price sales growth of 3.6% and its pre-tax profit guidance of £725m for the year, up 0.3% on last year.

"We believe that strong sales in July pulled forward sales from August," Next said.

"Sales in September were adversely affected by unusually warm weather and we saw a significant improvement in October when temperatures fell. We believe the improved sales growth in October recouped some of the lost sales in September and we do not expect sales growth for the rest of the year to be as strong as October."

At 0950 GMT, the shares were down 2.5% at 6,676p.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: "Some will be disappointed Next didn’t upgrade guidance on the back of today’s results. But this seems a sensible move. October’s stellar sales were likely a result of people putting off shopping for their winter-woollies in September, so it isn’t reasonable to expect this exaggerated level of sales growth to continue for the rest of the year.

"Of course, wider conditions on the high street remain a challenge. The continued dip of in-store sales at Next are testament to that. Although, to see overall sales in positive territory is good going, and is being driven by an excellent online business. Given the tough climate, Next can’t afford to take its foot off the gas, but today’s results back up the theory that the group’s one of the better run retailers on the high street."