Overseas expansion paying off for UK clothing retailer Next
Second-quarter full price sales up 3.2%
Next had expected a fall of 0.3%
Overseas sales online jump 21.9%
Raises full year profit guidance by 20 mln pounds
Shares up 8.5%, hit record high
Recasts paragraphs 1-9
By James Davey
LONDON, Aug 1 (Reuters) -A push by British clothing retailer Next NXT.L to expand overseas is starting to pay off, with strong international demand for its mid-priced goods helping it to beat sales forecasts and raise its profit outlook.
Next, considered by analysts to be one of the best run retailers in Britain, published an update on Thursday that showed overseas online sales growing by a "much better than expected" 21.9% in its second quarter to July 27.
The group said earlier this year that having established it was already very competitive on price against international peers, it had decided to slightly increase prices to fund more digital marketing, and would continue with that strategy.
Next has nearly 2 million overseas customers buying through its website and many more who buy its products such as dresses and trousers from 22 pounds ($28.12) via third party websites, or so called aggregators.
Chief Executive Simon Wolfson said in March that a major part of the growth was being driven by the aggregators.
The expansion, which will further pit it against the likes of H&M HMb.ST and Inditex's ITX.MC Zara, helped Next to counter a slower performance in Britain, where poor weather compared with the previous year weighed on the business.
Trading from more than 800 stores in the UK and Ireland and to nearly 8 million UK online customers, its second quarter full-price sales in the UK were only slightly ahead of expectations, up 0.4%.
Overall its full price sales rose 3.2% - ahead of guidance for a fall of 0.3% and versus growth of 5.7% in the first quarter.
It forecast profit before tax of 980 million pounds for 2024/25, up from previous guidance of 960 million and ahead of the 918 million pounds made in 2023/24. It kept its forecast for second half full-price sales to be up 2.5%.
Next shares rose 8.5%, hitting an all-time high.
While Next is considered a useful gauge of how British consumers are faring, its performance looks stronger than the wider market.
Official data published on July 19 showed overall UK retail sales volumes fell by more than expected in June, after unseasonably cooler weather put off shoppers, and industry data on Monday showed retailers suffered another bad month in July.
In early June, Inditex reported first quarter results in line with expectations, but in late June H&M missed quarterly earnings forecasts.
($1 = 0.7822 pounds)
Reporting by James Davey; editing by William James and Emelia Sithole-Matarise, Kirsten Donovan
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