Fashion retailers have faced something of a struggle over the past two years as, on top of fluctuating consumer confidence levels, the high street has been plagued with almost constantly unseasonable weather which has seen retailers’ schedules disrupted. This has meant that sales for new lines, especially for the autumn and winter collections, have often started slowly and gradually built up as the weather turns colder – something which seems to have paid off for Next.
The UK’s second largest high street retailer had an incredibly successful third quarter, posting a 4.3 per cent growth in sales for the three months to the 26th of October. This was almost double the rate of growth seen in the first half of 2013, which stands at 2.3 per cent, and resoundingly trounced analysts’ predictions of between 1 and 4 per cent growth in the second half, which were released in September.
As a result, Next has made the decision to up its profits forecast for the full year, which it may do again should the Christmas sales update posted for the period to the 24th of December on the 3rd of January yield further strong results. Previously, the brand expected profits to rise by between 2.2 per cent and 8.6 per cent, but now believes that a margin of between 4.6 per cent and 9.4 per cent is more likely.
This profits rise would see the group achieve an amount equating to between £650 million and £680 million; an excellent result for a brand which struggled significantly during the recession. In order for this to happen, sales would need to grow on a full year average basis of between 2 per cent and 3.75 per cent which, given the third quarter’s performance, is perfectly achievable.
Conlumio fashion consultant, Anusha Couttigane, believes that Next will continue to build upon this positive foundation in the fourth quarter and on into the New Year.
She says; “Next’s outlook remains strong. It is making headway in the style stakes, taking a step away from its usually ‘safe’ approach to fashion.”
Do you think Next’s new direction in its clothing lines is what’s contributing to its success, or are sales lifting because Next is a highly trusted brand which consumers are now returning to thanks to a lift in confidence?
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