Next raises profit forecast by £30m

21st Jul 2009 07:10

Better than expected trading inspired by the hot weather in June has prompted Next to increase its profit estimate for this year by £30m and bring forward its latest trading update by a week."As a result of better full price Next Retail sales and improved clearance rates we have added a further £15m to our internal profit forecast for the first half. Our product negotiations and sourcing have gone better than planned and we now anticipate that our bought in gross margin for the second half will be better than expected. As a result we have also added £15m to our internal profit forecast for the second half, " Next said.The high street giant reported total Next Retail sales in the 25 weeks to 18 July were up 1.4% excluding VAT, with like-for-like sales in the 394 stores that traded continuously down by 1.9%. Next Directory sales (VAT ex) were up 1.1% with total Next Brand sales (VAT ex) up 1.3%"Sales of summer clothing have benefited from much better weather than last year. We estimate that the warm temperatures have improved these Next Retail sales by between 2% and 3%, which will put sales for the first half ahead of the guidance given on 6 May," Next said."In addition, we have been much happier with the design and fashion content of our ranges across all product areas," it added.Next cautioned that as the first half benefited significantly from favourable weather comparisons, it has to be careful over assuming second half Next Retail like-for-like sales will be in line with those of the first half.Even so, it tentatively expects like for like sales in the second half will be in the range of -3.5% to -6.5%, though it warns that this does not do not account for any significant impact on sales from swine flu. "As yet we have observed no material effect" it said.