Next, the high street fashion retailer, yesterday reported a grim first-quarter performance but saw its share price rise sharply after saying warmer weather led a recovery in sales this month.
Next, the high street fashion retailer, yesterday reported a grim first-quarter performance but saw its share price rise sharply after saying warmer weather led a recovery in sales this month.
The Leicester-based group also said its internal forecasts for year to end-January 2009 pre-tax profit are in line with market consensus of £430m to £460m.
Combined sales of Next Retail and Next Directory for the 13 weeks to April 26 fell 3.9% to £738.9m. Next Retail sales alone were down 5% to £518.1m, with like-for-like sales in the 340 stores unaffected by new openings down 8.9%. Next Directory sales were down 1% to £220.8m.
Like many other UK retailers buffeted by the current economic downturn, Next said it remains "cautious" on the outlook. It said financial pressures on its customers resulting from cost increases in food, fuel, mortgage repayments and taxation were likely to continue for sometime.
However, the group said it continues to believe that sales in its second quarter to end-July will "improve significantly". The second quarter's comparative numbers are much easier than the first quarter as a consequence of last year's very poor weather in May, June and July.
The company noted that within the last 11 days, Next Retail sales have picked up markedly with the arrival of warmer weather and the cumulative performance from January 27 to May 7 has improved to minus 3.8%, with like-for-like sales down 7.8%.
It now expects total Next Retail sales for the first half will be down by around 3.5%, with like-for-like sales at the bottom end of its forecast range of minus 4% to minus 7%, "at around minus 7%".
Next said it had planned for weak demand and remains confident it will have less stock for the end of season sale than it had at the same time last year. As a result it is not planning any additional markdown activity.
The group continues to anticipate first-half Directory sales will grow by around 2%.
Chief executive Simon Wolfson said current trading is volatile and reckons the group is maintaining market share and is pleased with Next's current product ranges.
Despite the tough climate the group is continuing with its aggressive space expansion. It estimates that net additional space in Next Retail will be 110,000 square feet in the first half and 275,000 sq ft in the second half. It reckons by January 2009 it will be trading from 5.6 million sq ft, of which four million sq ft will be new, refitted or redecorated in the new format.
Next shares ended the session up 74p at 1302p.
Freddie George, an analyst at Seymour Pierce, upgraded his investment stance from "hold" to "buy", arguing the stock has been oversold.
Analysts at Citi said: "Today's statement suggests the most difficult trading period this year may be over for Next. The tough environment has been planned for and this suggests a lower level of seasonal markdown."
