Next PLC (LON:NXT) has raised full-year profit forecasts after once again beating expectations.
The retailer, which has a habit of under-promising and over-delivering, posted a 1.5% dip in full-price sales for the 13 weeks to 1 May compared to the same period two years ago, when no one knew about COVID-19.
READ: UK retailers to enjoy strong trading for months to come, analysts say
The FTSE 100 group previously assumed a 10% dip in sales in the period and beat this forecast by £75mln.
As a result, it now expects full-year profit before tax to be £20mln higher than guidance at £720mln.
Full-year sales are still estimated to be 3% higher than two years ago, with online up 24% and retail down 20%.
In the 13 weeks to 1 May, total online sales climbed 65% while retail in the UK and Ireland plunged 76% because almost all stores were closed for the first 10 weeks of the quarter.
The last three weeks saw sales growth of 19% compared to 2019, which was due to pent-up demand built up over the last three months, the fashion company said, and is “very unlikely” to be indicative of the demand for the rest of the year.
The firm also specified that all sales lost in stores were not simply transferred online, “in fact, very few of the retail sales lost on adult clothing were recovered online”.
However, online sales were boosted by NEXT Homeware, third-party brands (through LABEL) and NEXT Childrenswear, along with increasing sales overseas.
Following the update, UBS raised the price target to 8,300p from 8,200p after upgrading 2022 profit before tax guidance by 3% to £720mln.
"We feel there is a significant rebase to normality as lockdown restrictions ease. Next remains one of the most relevant UK platforms, fully geared into consumer recovery," analysts at Peel Hunt noted.
Shares jumped 3% to 8,372p on Thursday morning.
--Adds analyst comment, shares--