Following today’s release of Next’s figures for the 13 weeks ending 29th July 2024; Emily Salter, lead retail analyst at GlobalData, a leading data and analytics company, offers her view: “All eyes in retail will have been on Next’s Q2 FY2024/25 update today, to get an indication of how much impact the poor weather over summer has had on clothing sales in the UK. Next’s numbers provide a sense of optimism, with its total product full-price sales rising by 3.2%, far outperforming its expectations of -0.3% due to the tough comparatives it was up against because of the exceptionally warm weather last year. Although the UK underperformed this, with total sales rising 0.4% as consumers had less need to purchase new summer clothing, this is still an outperformance of the UK clothing & footwear market, which GlobalData forecasts to have declined in the three months to the end of July. Overseas online had an outstanding quarter and was the driver of growth, with revenue rising by 21.0%. Partnerships, like the one it struck with Indian online marketplace Myntra earlier in the year, should boost this growth over the longer term. As a result of this strong sales performance as well as cost savings, Next has increased its profit guidance for the full year by £20m to £980m.
“The impact of the poor weather in the UK can be seen in the performance of its two channels, with instore sales falling by 4.7% as consumers were put off visiting stores. Next was able to transfer some shoppers online, with sales for its own brand products rising by 0.6% online, and its LABEL third-party brands growing by 7.9%. This trend showcases the strength of Next’s branded proposition that has driven its performance over the past few years, with its own brand taking a back seat. This is despite other retailers introducing their own third-party brand propositions, such as key competitor Marks & Spencer. However, their approaches to this are different, as M&S has focused on elevating its product range, making it more fashionable to drive appeal among younger shoppers, with the addition of other brands to complement this, whereas Next has opted for a strategy of wider appeal by focusing on its plethora of brands.”
