In the 13 weeks to 31st October, full-price sales at Next were up +8.1% YoY, £33m ahead of the retailer's guidance of +5.8% for H2. All of the sales over-performance came from Next's international business, yet the additional £5m profit from these sales was offset by increased international operational costs.
As it expected, UK growth slowed compared to H1, with full price sales up 2% YoY – yet, it adds, this growth has been volatile, "with unseasonably warm weather adversely affecting sales in September".
The retailer says it is maintaining its Q4 full-price sales guidance to be up 5.8% YoY, and is maintaining its guidance for full-year PBT at £1,255m, up +8.4%.
"We expect full-price sales in the UK to be up 2%, in line with our performance in Q3," Next adds. "International growth is expected to moderate as we trade against stronger aggregator growth in Q4 last year."
It adds that it expects the new EU tariffs introduced this year, imposing additional costs on online orders placed in the EU, when the stock used to fulfil the order is imported from outside the EU, to impact its operations to some degree: "Although we have a large stockholding within the EU (with our partner ZEOS), some of our orders are fulfilled from our UK stockholding and so incur these charges. Over time we expect to fully mitigate these new tariff costs through adapting our operations and selective modest EU price increases. This year, as we adapt to the tariff change, we expect a net cost increase of around £5m after accounting for other cost savings."
