Fashion chain Next has raised its full-year profit outlook after seeing full-price sales rise 5% in the past three months as warmer weather boosted demand for summer clothing.
The group’s second-quarter sales performance beat expectations by £50m and the chain has raised its full-year profit guidance by £10m to £860m.
Total sales rose 5% in the three months to July 30 compared with last year, and were up 23.8% on the same period in 2019 before the pandemic.
In-store retailing has had a “renaissance” while growth in online shopping has stalled, the retailer said.
“If you haven’t been to an event or the office in three years, then the chances are high that you need to restock your wardrobe,” Lord Simon Wolfson, chief executive of Next, told the PA news agency .
“However, it remains to be seen how long-lasting the trend for higher quality formalwear can be.”
The post-pandemic resurgence in retail also boosted formal wear sales as demand for social events increased, while lockdown winners such as home wear and sportswear declined.
But Next expects the unseasonably warm weather to ease and the impact of rising inflation on consumer spending to worsen, holding back sales in the second half of the year.
“While we have yet to see any change in consumer buying behaviour, we know that prices will rise and this will affect demand for new clothes,” added Lord Wolfson.
“Costs are going up and we’re going to have to pass that on to sales, which means people won’t be buying as much as they did in the first half of the year.”
Earlier this year, Next warned that prices would rise by up to 6% in the autumn and winter as it battled rising freight costs and higher staff wages.
But shipping disruption has improved since the pandemic and some costs are coming down, Lord Wolfson told PA.
“After the pandemic we saw shipping times go up to six months, but now the delays have been reduced dramatically and the speed of shipping has improved,” he said.
Richard Lim, chief executive of consultancy Retail Economics, said Next had reacted quickly to changes in consumer trends, but warned of a decline in demand for fashion in the coming months.
“As summer approaches, the cost of living crisis will be harder on households across the country.
“Consumers will look to delay, trade up and cancel some purchases altogether as the rising cost of commodities erodes the cash they have left at the end of the month.
“Clothing will be one of the areas many consumers will look to reduce their spending, making do with their current wardrobes, cutting back on some areas or downsizing to cheaper brands and private label.”