Next has posted better than expected second quarter results, with online sales up 9% and expects to make a full-year profit of £195 million – although it warns a second wave of coronavirus could see this revised downwards.
Like-for-like store sales fell 32% across the quarter, however this wasn’t as bad as the 50%-plus drop the retailer had predicted back in March at the start of lockdown, saying in a statement that store sales had in fact been “more robust” than predicted, resulting in sales “significantly ahead” of its internal plan.
Unsurprisingly, online has also helped make up some of the shortfall, with Q2 online sales growing 9%, making for an 11% surge in online sales for the first half of the year to 25 July. This comes off the back of a 32% fall in online sales in Q1, so there is still some way to go.
The retailer said that one of the factors contributing to the results was that its warehouses weren’t as hard hit as had been feared and where there had been closures, capacity came back faster than had been initially planned.
To help maintain this online growth, Next says it is now planning to significantly improve its picking capacity across its warehouses, with 24-hour shift patterns and “greater support for warehouse activities during peak periods”.
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.”