Fashion retailer Next PLC (LON:NXT) maintained its full-year guidance after third-quarter sales were led higher by a strong performance in the online business.
In a brief trading update on Wednesday, the company said total full price sales rose 2.0% in the quarter ended October 27.
READ: Next raises full-year profit guidance after warm weather boosts first-half sales
Full price sales of products grew 1.3% as a 12.7% jump in online sales offset an 8.0% decline at Next’s retail stores.
Finance interest income from Next’s credit account customers gained 11.9%.
In comparison, full-price sales in the second quarter rose 2.8% with sales in retail stores down 5.9% and online sales up 12.5%.
“The trading update provided by Next this morning was still highly reflective of conditions within the retail sector as sales in physical stores continued to head lower, but the pace of the slowdown quickened a little to -8% dragging the year to date figure to -6.3%," said Helal Miah, investment research analyst at The Share Centre.
He added: "On the face of it, Next’s figures look reasonably good compared to others on the high street, but it was nonetheless a little disappointing leaving the shares to fall by roughly 4% in early trading on a day when the rest of the market has seen strong gains."
In mid-morning trading. shares dipped 2.6% to 5,166p.
Next maintains profit guidance
Next continues to expect total full price sales growth for the year to January 2019 of 3.0%. Pre-tax profit is still expected to edge up 0.1% to £727mln.
The company upgraded its profit guidance in the second quarter results, which were published in September.
The latest figures reflect the shifting trend towards online shopping, which has prompted a number of high street retailers to use a company voluntary arrangement (CVA) -- a form of insolvency that enables a business to exit unwanted properties and negotiate rent cuts across groups of stores.
House of Fraser, which was rescued by Sports Direct International PLC (LON:SPD) in August, Mothercare, Carpetright and New Look have all used a CVA to close stores.
Investors await key Christmas trading update
AJ Bell investment director Russ Mould said Next will likely set the tone for the retail sector when it is one of the first to report its Christmas trading update on January 3.
“Chief executive Simon Wolfson’s skill at managing expectations looks set to be tested as Next now heads into the most important trading period of the year against an extremely uncertain consumer backdrop," he said.
“A weak outturn might increase pressure on management to consider more radical solutions to the structural challenges facing its physical shops.”