FASHION and homewares chain Next saw shares surge more than 8% as the high-street bellwether lifted profit guidance after beating city forecasts in its first half with results boosted by better weather in July and a strong overseas performance.

The high street retailer said stronger-than-expected sales and increased cost-savings in the second quarter saw full-price sales rise by 3.2%, exceeding its forecasts by £42 million. Next had prepared for a 0.3% drop in sales to the end of July compared to the same time last year when the UK benefited from “exceptionally favourable” weather.

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This performance saw the retailer increase its annual forecast by £20m to £98m, up 6.7% on last year, despite disappointing summer weather this year and ongoing headwinds from the cost of living crisis and inflationary pressures affecting consumers.

Next, now under the stewardship of chief executive Lord Wolfson of Aspley Guise, has about 500 shops in the UK and Ireland and a long-established online business. It also operates over 200 franchised stores in over countries.

In a trading statement it said: “The weather last summer was exceptionally favourable for clothing retailers, so we had planned for full-price sales to be down 0.3% in the second quarter this year.

“Our full-price sales in the UK (online and retail combined) were only slightly ahead of our expectations, up +0.4%. Overseas sales online were much better than expected and were up 21.9%. Group sales, which includes sales in our subsidiaries, were up 8.0% in the first half.”

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The retailer noted that the additional growth in group sales came from the acquisition of fashion and lifestyle brand FatFace and an increase in its shareholding in premium fashion brand Reiss, both of which occurred in Q3 last year.

In maintaining its guidance for full-price sales in the second half to be up 2.5% versus last year, Next said: “This might seem cautious when compared with the performance in the first half, which was up 4.4%.

However, when compared to two years ago, growth in the first half and the forecast for the second half are almost identical.”

Julie Palmer, partner at Begbies Traynor, commented: “True to form, Next has once again beaten its own expectations to deliver a healthy 3.2% increase in sales, compared to the 0.3% drop the retailer had anticipated.

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“As expected, Next has experienced softer trading in the UK, with sales up just 0.4%, driven by the recent wet weather that has dampened trading across the sector. However, this slowdown should not ring alarm bells for the market as the FTSE 100 stalwart still looks in great shape at a time when many smaller peers are struggling.”

Noting that the performance has been lifted by the 21.9% rise in overseas sales online, Ms Palmer said the easing of inflationary pressures, coupled with a notable rise in consumer confidence, “should provide a welcome boost to sales in the UK and encourage customers to fill their baskets again”.

She added: “As many retailers have shown, the current climate is not easy to navigate, especially with less pricing power and ever-changing demand. Yet Next’s ability to strengthen and adapt both its online and bricks-and-mortar operations has meant it continues to thrive as it heads towards another year of record profit.”

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Looking ahead, she pointed to the retailer’s “impressive track record of resilience and adaptability that puts it in prime position for a rebound in consumer spending”.

At AJ Bell, meanwhile, analysts highlighted Next’s “reputation for under-promising and over-delivering, noting: “It’s delivered the goods once again. The retailer had low expectations for summer 2024 as beating last year’s strong performance was always going to be a tough challenge.

“While the first half of 2024 has been truly miserable for the UK retail sector thanks to unfavourable weather, the end of June perked up and much of July has had glorious sunshine. That’s encouraged people to get out of the house and into the shops. Next has once again grabbed a slice of consumer spending, helping to make up for a challenging time earlier this year.

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However, they stressed that much of Next’s success in its second-quarter period came from overseas where growth rates were in double-digits, noting: “Many people might not realise Next has international operations and is active in 34 countries. At 1.7 million overseas customers, it is certainly not a marginal player, and this amount compares to approximately one-fifth of its UK’s online customer base.”

Shares closed yesterday at 9,814p.