Next has announced that full-price sales in its second quarter fell by only 28%, welcoming the “better than expected” results against previous predictions that sales would collapse by 50%.
The retailer said that warehouse capacity has come back faster than initially planned, while store sales have been “more robust” than anticipated, leading to sales that were “significantly ahead” of its internal plan.
In the quarter ended 25 July, online sales rose by 9%, though like-for-like sales in retail stores, since they re-opened, were down by 32%.
To support this growth in online sales, Next is now taking “active steps” to improve its picking capacity across online warehouses through introducing 24-hour working shift patterns and “greater support” for warehouse activities during peak periods.
The group now expects its end net debt will fall by around £460m to £650m, “comfortably” within the company’s cash resources of £1.6bn.
It currently estimates that full-year profit before tax will be £195m. However, it expects this figure could be as high as £330m or as low as £15m.
In a statement, the retailer said: “There is still much that remains uncertain and our central scenario cannot be accorded the same degree of confidence that our guidance would normally receive at this time of year.
“The duration of social distancing rules, post-lockdown consumer behaviour, earnings, unemployment, and, most importantly, whether there will be a second wave lockdown, all remain unknowable.”
It added: “Nonetheless, our experience over the last 13 weeks has given us much greater clarity on our online capabilities during lockdown and the state of consumer demand, and we are now more optimistic about the outlook for the full year than we were at the height of the pandemic.
“In summary, the company is in a much better position than we anticipated three months ago: consumer demand has held up better than expected and our online warehouses have achieved much higher capacities than we thought possible. Costs have been well controlled, and we have taken steps to ensure that our balance sheet is secure.”