Next achieved a +2.8% uplift in full-price sales in Q2 (ending 28 July) saying the prolonged period of exceptionally warm weather had “greatly assisted the sales of summer weight product”.
The high street giant said its online sales were up +12.5%, driven by the growth in its overseas and third party brands business, along with more modest growth in sales of Next branded stock in the UK. Store sales, however, were down -5.9%. The results meant that in the first half full-price sales were up +4.5%, while stores sales were down -5.3% and online up +15.5%, of which +0.4% of increased sales were down to new space.
In its trading statement released this morning it said that it was maintaining its full-year guidance of a +1% uplift in full-price sales despite the boost from the heatwave, as it was “almost certain” some of these sales had been brought forward from August.
The retailer confirmed that it had brought forward its summer sale by one week this year, beginning on 7 July, and that due to close stock control throughout the year it had gone into the sale period with -20% less stock than last year.
Clearance rates to date were better than expected, Next said, and have added approximately £4m to profit, however, this has largely been offset by higher warehouse and distribution costs. Markdown sales combined with full price sales growth of +4.5% has resulted in total sales in the first half being up +3.9% on last year.
Yesterday Next chief Lord Simon Wolfson used a television appearance to urge the government to reform the business rates system, which many believe places an unfair burden on retailers and don’t take into account the vastly differing fortunes of high streets and retail centres across the country.
“In thriving towns and city centres we should be paying high rates, but the ones that are dying, that process is being accelerated by rates that are stuck at levels that don’t reflect today’s reality,” he said.
The British Retail Consortium has also urged the government to review the system and has called for a two-year freeze on business rates to give retailers some breathing space as they came to terms with the challenges facing the market and the ongoing shift in consumer behaviour.