2Q20 Update Next reported a strong 2Q20 (ended July 27), with full-price product sales up 3.7% year over year compared to 4% growth in the previous quarter and beating the consensus estimate of 0.1% growth. Total full-price sales including interest income grew 4% year over year compared to 4.5% growth in the previous quarter, and 4.5 percentage points ahead of the guidance of (0.5)% given in its May trading statement. Full-price sales during May and June combined were up 3.0% year on year, while July full price sales were up 6.8%. Some of July’s over-performance in full-price sales was due to lower markdown sales during the end-of-season sale. Within full-price product sales, retail (in-store) segment sales were down 4.2% year over year compared to a 3.6% decline in the previous quarter, while online sales rose 12% year over year compared to 11.8% growth in the previous quarter. Finance interest income grew 8.3% year over year, compared to 11.4% growth in the previous quarter. 1H20 Update Full-price sales including interest income for the first half (26 weeks ended July 27), were up 4.3% year over year. Total product sales, including markdown sales, were up 3.8%. Within full-price product sales, in-store sales were down 3.9% year over, while online sales were up 11.9% year over year. Outlook The better-than-anticipated sales performance in the second quarter prompted management to increase its full-price sales guidance for the second half from up 1.7% to up 3.0%, in line with full-price sales growth in May and June. The company also lifted FY20 guidance, predicting in-store sales will decline 5.1% year over year at mid-point, compared to previous guidance of an 8.5% decline. It guided for online sales to grow 11.8% at mid-point compared to previous guidance of 11% growth. Finance interest income is expected to grow 8.1% year over year at mid-point, compared to previous guidance of 9.9% growth. Total full-price sales are expected to grow 3.6% year over year at mid-point, compared to previous guidance of 1.7% growth. The company guided for full-year group profit to grow 0.3% year over year to £725 million, compared to previous guidance of £715 million. It expects EPS to grow 5.2% compared to previous guidance of 3.4%.