Next Plc (NXT), the U.K.’s second-largest clothing retailer, increased its annual profit forecast after reporting first-half sales that rose more than analysts estimated, driven by a surge in online and catalog sales.
Pretax profit in the fiscal year through January 2013 will increase to as much as 620 million pounds ($976 million), the Leicester, England-based retailer said today, compared with a previous maximum target of 610 million pounds.
Next reported a 4.5 percent increase in sales under its own brand, driven by a 13 percent gain at the Directory unit, which includes online and catalog sales. Next’s performance belies difficulties in the national retail market, which included the wettest June since 1910. That curbed spending on summer fashions in the U.K., where retail sales rose 0.1 percent in the month, according to the Office of National Statistics.
“Next deserves a gold medal for its remarkable achievement in topping expectations and edging up its full-year guidance, despite a very difficult three months in fashion retailing,” Nick Bubb, an independent retail analyst, said by e-mail.
The shares rose 4.5 percent to 3,365 pence at 8:06 a.m. in London trading. That boosted the company’s market value to 5.5 billion pounds, re-establishing its lead over competitor Marks & Spencer Group Plc, which has a value of 5.4 billion pounds.
The increase in Next brand sales in the 26 weeks ended July 28 exceeded the 2.1 percent median estimate of seven analysts compiled by Bloomberg. For the year, the retailer said it now anticipates sales growth of 2 percent to 4.5 percent, up from a previous forecast of 1 percent to 4 percent.
“It’s a very decent all-round performance,” said Richard Cathcart, an analyst at Espirito Santo in London. He has a neutral recommendation on the stock.