Clothing retailer Next has lifted its full-year profit hopes today after warm weather and the royal wedding bank holiday encouraged UK customers to spend.
The UK high street giant, which has suffered from mediocre sales since a dismal Christmas season, said consumers brought forward summer purchases and helped lift total sales by 5.2% in the 13 weeks to April 30.
However, Next, which has more than 500 stores in the UK and Ireland, warned it did expect the current levels of growth to continue into the second quarter and remained cautious as consumer spending is squeezed.
The company said it now expected pre-tax profits for the full year to be between £535-585m sterling, around £15m ahead of the guidance given in March and above market expectations.
Next, and the wider UK retail sector, has been hit by a slowdown in consumer spending this year, as the VAT hike from 17.5% to 20% and soaring input costs squeeze household incomes.
In the company's last update in March, Next chief executive Simon Wolfson warned: 'Things are likely to get worse before they get better'.
But the picture has improved for the retailer as online sales soared 14.8% and retail increased by 0.9%, all excluding VAT. The company said sales were driven by better ranges and improved stock availability, particularly in womenswear.
Next Directory - its online outlet - has benefited from more aggressive marketing and improved delivery services, the company added. It now expects combined retail and online sales to be up by between 1% and 4% for the full year, up on the guidance issued in March.
Looking ahead, however, Next remains cautious. 'The combined effects of the public sector deficit cuts and continued inflation in essential commodities are all likely to restrain growth in consumer spending generally,' the company said.
Next said it continued to expect price increases to be marginally higher in the second half than in the first, at around 8%.
