Next has raised its annual profit forecast for the fourth time this year after warmer weather helped deliver stronger-than-expected sales during the first half.
The retailer now expects full-year profits to reach £1.26 billion, increasing its previous forecast by £12 million.
Total sales across the group increased by 9% during the six months to July, while pre-tax profits climbed 11% to £566 million.
Next said its first-half performance had been “much better than we originally anticipated” both in the UK and overseas, although it acknowledged that unusually warm weather had contributed to the stronger performance.
The retailer said: “It is important to acknowledge that part of this overperformance has been the result of two unusually warm summers in the UK.”
It added that the remainder of its stronger performance was largely down to progress against the objectives it set at the beginning of the year, alongside cost-saving measures, particularly across its warehouse operations.
Despite the positive first half, Next has taken a more cautious view of the months ahead.
The business lowered its UK sales growth expectations for the six months to the end of January from 2.8% to 2%, with the UK accounting for around three-quarters of the group’s total sales.
Next highlighted rising inflation, higher mortgage costs and weakness in the employment market among the main pressures facing consumers.
Chief Executive Simon Wolfson said it was “sensible to moderate our expectations” as the company looked towards the second half of the year.
“We are not talking about [consumer spending] falling off a cliff,” he said. “I think things are likely to get worse rather than better.”
The retailer also said it does not currently expect the escalation of hostilities in the Middle East to result in further increases to its shipping costs, with existing increases already factored into its forecasts.
Next operates more than 500 stores across the UK and has continued to expand its wider retail portfolio in recent years, alongside its significant online operation.
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