Following today’s release of Next’s figures for the 13 weeks ending 28th October 2023; Emily Salter, lead retail analyst at GlobalData, a leading data and analytics company, offers her view: “Next has reported another strong set of results, with its Q3 FY2023/24 total full-price sales up 4.0%, compared to its previous guidance of 2.0% as its expectations have once again proved cautious, underestimating consumers’ desire to keep on spending. The retailer has yet again upgraded its full year full-price sales guidance, this time from 2.6% to 3.1%, alongside increasing its profit before tax guidance by £10m to £885m. Clothing & footwear will have been the driving force of Next’s growth during the period, with home likely underperforming due to its more premium image and brand presence (Made.com, Swoon and Laura Ashley) with consumers switching to retailers that represent better value for money such as IKEA and Dunelm. The lesser presence of home items in Next’s stores will also have dented sales as consumers have been eager to return to stores in 2023.
“Although consumer confidence did not change drastically during the period, Next’s weekly sales growths were volatile as it was affected by the weather. After a strong performance in August when the weather was poor and consumers turned to shopping in their free time rather than spending time outside, September saw negative sales in all but one week as the UK experienced warmer weather than usual, with autumn/ winter products already in stores but not matching consumer demand. The last two weeks of the quarter saw sales rise by 16% and 11% as autumnal weather finally arrived and consumers sought out items such as coats and knitwear. In a huge contrast to ASOS’ results this morning, whose FY2022/23 group revenue fell by 9.8%, Next’s online sales grew by 6.5%, as its omnichannel offer and wide brand range appeals to shoppers, and it has not been affected by the rapid rise of Shein due to its older shopper base.
“Next continued its acquisition spree with its purchase of FatFace in October, with the retailer performing well in its FY2022/23. As long as the transition to Next’s Total Platform in the next 12 months is smooth, this is a move that should pay off for both players. Even though FatFace has a relatively high online penetration at 40%, Next has said that it will continue to operate and develop FatFace’s store portfolio, which is a wise move given its unique brand identity that can more easily be conveyed to shoppers in its stores.”
