Fashion chain Next is sticking with full year guidance given in March after first quarter sales showed a small year-on-year improvement, helped by contributions from new stores.
Sales, excluding value added tax (VAT), for the bricks and mortar retail estate fell 3.9% in the 13 weeks to April 28th from a year earlier, but the Directory division - catalogue and Internet sales - rode to the rescue with sales growth of 11.8%. Total sales over the period were up 1.4%, of which net sales from new space accounted for 2.9% of total sales growth.
There was little change in Next's product costs, gross margins or selling prices in the first quarter and the group expects this to continue into the second quarter.
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Stock levels are running slightly ahead of last year and consistent with the growth in sales. Directory customer balances have risen with the growth in credit sales and bad debt remains at historically low levels.
"To reiterate, we believe that if sales were up between +1% and +4% [the group's current guidance range] for the full year, then profits would be between £560m and £610m. This is in line with market expectations and the majority of analyst forecasts fall within this range," the group said.
Next has plans to buy back up to £200m of shares from surplus cash flows, of which £36m to date has already been spent buying 1.3m shares.
"We now estimate the cumulative effects of intended share buybacks and cash generation, together with lower corporation tax rates, will increase this year's EPS [earnings per share] by 6% more than the growth in profit (previously 5%)," the company said.
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