Next has announced that full price sales were down by 33% in the first half of the year, following the impact of the pandemic.
Full price sales in the last seven weeks of trading were up 4% on last year, however, with the group welcoming a “strong start” with sales that have “continued to exceed” its expectations.
In light of this, the retailer has raised its profit forecast for the second time, and now expects full price sales to hit £300m, up from the previous central scenario of £195m.
In addition, the group noted that sales performance through the pandemic was “more resilient” than expected.
It added that the scale of its online business, the breadth of its product offer, and the out of town location of its stores have all “served to mitigate the worst effects of the pandemic on trade”.
It comes as online sales accounted for more than half of its turnover going into the pandemic.
The group noted that online sales have also been “significantly stronger” since its stores reopened than they were before the pandemic struck, adding that “some lockdown habits have stuck, and we have been able to take advantage of this shift to online”.
In its latest trading update, the company confirmed its finances are in “good shape”, noting it has reduced stock levels and costs as the pandemic progressed.
The group has also generated cash flow from its customer credit book and the sale of some assets.
It added that these actions, along with the fact that the business went into the pandemic with “healthy” net margins and low capital requirements, mean that it is “likely to go into next year with significantly less net debt than we had at the start of the year”.
In a statement, the retailer said: “Standing as we are, in the midst of the pandemic, with no sign yet of abatement or vaccine, it might seem odd that the essential tone of this report is optimistic. Particularly, some might say, coming from Next.
“But our confidence in the future is not because we see a comfortable route through to the end of the pandemic.”
It added: “The prospects for the next six months remain as uncertain as the outlook for the virus itself; never has our guidance been more tentative or as broad in its possible outcomes.
“But in all our guidance scenarios the group generates a profit, generates cash and reduces its debts. So we can look to the end of this extraordinary time – whenever that may be – in the belief that we can build on the strength of the Next brand, its people and its infrastructure along with all the new opportunities those assets might deliver.”