Next Plc raised its full-year sales and earnings forecasts, saying consumers are buying more clothes because of salary increases and warmer spring weather.
(Bloomberg) — Next Plc raised its full-year sales and earnings forecasts, saying consumers are buying more clothes because of salary increases and warmer spring weather.
Next shares rose as much as 6% Monday after the British apparel and housewares chain said pretax profit should reach £835 million ($1.07 billion). The previous forecast was £795 million.Â
Full-price sales have unexpectedly increased 9.3% in the past seven weeks, while Next had forecast a decline of 5%. A cold start to the spring season had weighed on spending earlier.
Consumers in the UK are getting pinched by surging costs of everything from mortgages to food. While Tesco Plc said last week there are early signs that inflation may be decelerating, shoppers are still struggling with their biggest loss in purchasing power in decades. Shop price inflation quickened to 9% in May, a new peak for an index that started in 2005, according to a recent report by the British Retail Consortium.
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Next said it expects inflation to erode the impact of the wage increases over time.
Shares of other UK clothing retailers gained on optimism for the sector after Next’s update. Asos Plc rose as much as 9.9% while Boohoo Group Plc advanced 3.5%.
(Updates with details on economy in fourth paragraph)
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