July 29, 2020 / 7:04 AM / in 16 days

Next lifts profit view as sales fall less than feared

FILE PHOTO: A Next logo is seen outside a store in central London, Britain January 3, 2017. REUTERS/Stefan Wermuth

LONDON (Reuters) - Fashion retailer Next (NXT.L) raised its profit forecast on Wednesday after sales fell less than feared over the past three months as Britain emerged from a coronavirus lockdown.

Shares in the company jumped as much as 10% after it forecast full-year profit of about 195 million pounds . That was up from its guidance range in April of between a 150 million pound profit and a 150 million pound loss.

Sales fell 28% in the quarter to July 25, against the 50% drop forecast in April.

“The stores opened better than we thought; they were still obviously down a long way (...) but we were expecting them to be down as much as they were in the week going into lockdown,” Chief Executive Simon Wolfson told Reuters in an interview.

“And we managed to build back our warehouse capacity much faster than we had anticipated we would be able to do.”

Online sales bounced back as warehouses returned to normal, with sales up 9%, helped by much lower returns on the categories that were selling well - childrenswear, home and casual clothes - than on items less in demand, such as dresses and formal wear.

Like-for-like sales in Next stores, the bulk of which re-opened in June, were down 72% in the quarter, and down 32% since June 15.

Wolfson said stores in retail parks where it was easy to socially distance were performing much better than those on high streets and in shopping centres, reflecting lower footfall in city centres and less use of public transport.

Next still has about 12% of staff on furlough, Wolfson said, but he expects all of them to return by November. He said the company was not planning job cuts beyond a small number already announced at head office.

Reporting by Paul Sandle; editing by Guy Faulconbridge and Mark Potter

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