Retailer bellwether Next to reveal if wet August dampened sales boom

Retail heavyweight Next will reveal if wet August weather has dampened its strong sales growth when it reports first-half results this week.

Next will report strong first-half sales on Wednesday, but investors will be keen to hear whether bumper trading has continued in recent weeks.

The firm has already flagged that the interim figures will be robust, with sales up almost 8 per cent in the period which has helped prompt a £30 million upgrade to full year profit guidance.

Sophie Lund-Yates, analyst at Hargreaves Lansdown, said the key issue investors will want to hear about is current sale momentum alongside any impact of supply chain pressures and fuel shortages.

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“Second quarter sales far outpaced the first, largely because of pent up demand and warm weather. What we’d like to know is at what pace this is slowing down,” she said.

“As the warm weather eased, so did sales, so exactly what this will translate to is yet to be seen.”

Lund-Yates said analysts will also be looking for an update on the group’s store estate.

“Sales have been declining for a while, but we wonder how the autumn/winter collections are being received in-store. Next’s prevalence in out-of-town retail parks means it may have been able to perform better than peers as more of the UK gets back to the office and social events.”

Russ Mould, AJ Bell’s investment director, said investors will also be keen to hear an update on dividend plans.

Alongside the second-quarter trading statement Next announced a plan to return £240m in what it called excess cash to shareholders. It paid out £140m – or 110p a share – on 3 September and said it would pay out the rest - £100m or around 78p a share – following the Christmas trading update in January 2022, assuming all was going to plan.

“Next also noted that it would then look to resume ordinary dividend payments in the year to January 2023, when analysts and shareholders may also ponder the resumption of share buybacks as well,” he said.

Mould calculates that over the last decade the retailer has paid out £2.2bn in dividends and £1.9bn in buybacks.

“Those buybacks have taken the share count down from 181 million to around 127 million, effectively increasing a shareholder’s stake by a third, had they sold no stock at all.”

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