Retailer Next defied the economic gloom today to lift its full-year sales and profit forecasts after warm weather in June and July spurred better-than-expected trade.
With food retailers warning that shoppers were starting to cut their spending as inflation heads for double digits, analysts and investors have turned cautious on the British economy as households face the tightest squeeze since the 1950s.
Next, which trades from about 500 stores and online, said the warm weather had helped to spur sales while a post-pandemic return to formal events such as weddings had played to its strengths.
Despite this, it did not expect the rate of growth to continue as the one-off impact from warm weather fades and inflation eats into consumer budgets.
The Bank of England is expected to raise interest rates by the most since 1995 later today, adding to the pressure.
"The stronger than expected sales performance in Q2 is not expected to continue into the second half," Next said.
Full-price sales rose 5% in the second quarter from the same time last year, £50m ahead of the firm's previous guidance.
Next said it now expected full-price sales to rise by around 6.2% in the 2022/23 year, compared with an earlier forecast of 5%. It raised its pre-tax forecast by £10m to £860m.
Next also said its stores had outperformed its online business as trends from the pandemic were reversed.
UK fashion group Frasers boosted its shares with a solid trading update in July, while home furnishing retailer Dunelm also reported pent up demand in recent weeks.
