Fashion retailer Next has reported a slowdown in UK sales growth, as unseasonably warm weather dampened consumer demand throughout September. However, the retail giant revealed that overall growth strengthened during the latest quarter, buoyed by robust international performance, prompting the company to revise its sales forecasts upwards.
Quarterly performance and upgraded guidance
Next told shareholders that total full-price sales climbed 8.1% for the 13 weeks to October 31, compared with the same period a year earlier. The figure came in some £33 million above guidance, having previously forecast growth of 5.8% for the current half-year.
This followed growth of 7.7% recorded during the first half of the current financial year. The solid overall performance came despite a subdued showing domestically, where quarterly sales growth eased to 2%, down from 3.6% in the preceding six months.
UK slowdown and weather impact
UK online sales also decelerated to 4.4% for the quarter, compared with 7.4% in the first half of the year. Meanwhile, in-store sales remained broadly stable but continued to contract, falling by 1.7%.
Next acknowledged that the UK sales slowdown had been "as expected", pointing to a "volatile" trading environment in the region amid ongoing pressure on household budgets. The Leicester-based retailer also attributed part of the weakness to unusually mild temperatures in September, which weighed on sales for considerable stretches of the month.
The Office for National Statistics (ONS) recently confirmed that sales volumes across fashion retailers fell in September, as the warmer conditions curbed appetite for autumn and winter ranges, including jackets and coats.
International growth and outlook
Next said this was counterbalanced by its international operations, which recorded sales jumping by nearly a third, 32.2%, and exceeded projections of 20.5% growth. The retailer said it witnessed expansion through direct sales and third-party aggregators following increased marketing expenditure.
The firm said it consequently anticipates total group sales to be marginally stronger than earlier predictions. It said it remains on course for total sales growth of 7.6% to £7.54 billion for the year to January, having previously indicated a 6.9% rise to £7.49 billion. Profits are still projected to grow by 8.4% to £1.255 billion for the year, Next said.
