Next upgrades profit outlook again as it benefits from summer spending

Clothing and homeware chain Next has boosted its profit guidance for the third time this year, attributing the improvement to the hot summer and increased spending. The retailer, which owns brands like Gap and Victoria's Secret, saw a 9% rise in full-price sales in the latest quarter compared to the same period last year, surpassing its initial forecast of a 4% increase.

Next's growth is attributed to a mix of its alternative brands and strong online sales, with in-store trading lagging due to customers staying away from high streets during the sweltering summer months. The company, which operates over 500 stores across the UK, anticipates ending the year with a pre-tax profit of £1.2bn, a £25m rise from previous estimates and a potential 7.3% increase year-on-year.

Shares in Next jumped almost 7% to a record high after the guidance update, becoming the top performer in the FTSE 100 index. Analysts have praised the company for its habit of under-promising and over-delivering, suggesting it may continue to outperform despite challenges in consumer spending. While other retailers face difficulties due to inflation and reduced consumer confidence, Next's strong performance during the summer months has caught the attention of investors.

However, some experts argue that the company may be downplaying the significance of its strong summer sales, attributing them more to effective management and strategic product offerings rather than exceptional weather or pent-up demand.