Following today’s release of Next’s figures for Q2, FY2022/23;
Emily Salter, Senior Apparel Analyst at GlobalData, a leading data and analytics company, offers her view: “Next’s momentum has continued into its Q2 FY2022/23 with total full-price sales rising by 5.0%, an impressive 25.5% higher versus pre-pandemic levels as consumers flocked back to stores and demand for its leading multi-brand online proposition remained high. The retailer’s full-price sales growth was 4.7% stronger than it expected, which it attributes to the unusually hot June and July driving demand for summer clothing as consumers refreshed their wardrobes, and formalwear being back in favour with a summer of weddings after two years of cancelled events. Despite this better-than-expected performance, Next maintains its H2 full-price sales growth guidance of 1.0% as the impacts of inflation on consumer spending will worsen, though it is in a good place to weather this due to the presence of more essential categories and a wide range of price points. Next also raised its FY profit guidance this morning by £10m to £860m, equating to 4.5% year-on-year growth, indicating that it is effectively managing the rising costs across the supply chain.
“In its Q2, Next saw a reversal of COVID-19 trends, with instore sales better than expected; sales of categories that excelled during lockdowns, such as sportswear and homewares, abated; and formalwear rose in popularity. Additionally, after two years of suppressed returns rates, Next’s rose to pre-pandemic levels. Unlike many online pureplays that are struggling with unusually elevated returns rates, such as ASOS and boohoo.com, Next’s was only 1ppt higher than H1 FY2019/20, as a result of the important role of its stores and the fact that it has always charged for returns, shaping the behaviour of its online shoppers.
“Despite all this, long-term trends will persist, with sportswear and casualwear set to prevail again, and online will continue to outperform stores. On a three year comparative, online and retail sales grew 44.4% and 4.7% respectively, highlighting the clear trajectory of its two channels. In fact, Next did not expect its instore sales to be higher than pre-COVID levels, but it will have benefitted from the closure of its competitor’s stores, especially Marks & Spencer and Debenhams.”