Sales in the first half of the year at Next have been dominated by a sharp reversal of last year’s lockdown trends. Sales in Retail stores recovered, while Online growth appears to have reverted back to its longer-term trajectory. Many product trends have also returned to pre-pandemic norms. Lockdown winners such as Home and sportswear retreated, while formalwear returned to favour. As anticipated, online returns rates and surplus stock also reverted to pre-lockdown levels.
The business said that full-price sales in the second quarter were 4.7 per cent stronger than expected. A marked return to formal dressing, perhaps driven by pent-up demand for social events (weddings etc.), had also played to the strengths of the NEXT brand.
”At first sight, our full price sales performance against last year suggests that growth online has ground to a halt and that retail is having something of a renaissance. This is certainly the case on a one year basis. But we think that these changes reflect a short-term reversal of pandemic trends, and are unlikely to be indicative of longer-term trends in consumer behaviour.
“Last year, our stores were closed for most of the first quarter. Even when they reopened we believe that many customers remained wary of visiting shops. During this time we think online shopping was inflated by at least as much as retail sales were depressed.”
Returns rates are currently close to pre-pandemic levels at 42 per cent. This follows two years of exceptionally low returns rates during the pandemic. The low returns rates during the pandemic were mainly driven by product mix, with sales of low returning categories such as Home, childrenswear and sportswear far exceeding their normal levels.
Full-year profit guidance has been raised by £10m to £860m.