1Q19 Update

British fashion retailer Next reported growth of 6.0% in total full-price sales in the 14 weeks ended May 7, 2018. Some 0.4% of the total sales growth was due to new space, implying strong comparable sales growth of 5.6% in the quarter. Full-price in-store retail sales declined by 4.8%, while full-price online sales jumped by 18.1%. According to the company, growth of Next branded inventory and third-party brands on the UK website as well as continued growth from its international business drove online sales. Next stated that performance in the first quarter was “better than…expected” and that sales including VAT and interest income was ahead of the internal forecast by £40 million, boosted by unusually warm weather in recent weeks.

Outlook

Next raised its FY19 guidance for the group in light of the sales out performance, which adds some £12 million to the full-year profit. Management now guides for the following for FY19:

• Total full-price sales growth of 2.2% (versus 1.0% previously).
• Group PBT of £717 million, representing a decline of 1.3% (versus £705 million and a decline of 2.9%).
• EPS growth of 3.7% (versus 1.4%).

For FY18, analysts expect Next to grow nonstatutory group sales by 0.3% and EPS by 0.7%. Analysts expect PBT to contract by 2.7%. These estimates were compiled before the latest update. Next is scheduled to announce the first half results on August 1, 2018.