Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “A strong start to the year helped Next fashion another slim upgrade to full-year profit guidance.
“The uplift was driven by a better-than-expected UK performance over the first quarter, with double-digit online growth more than offsetting a 3.4 per cent decline in its retail stores.
“International sales continued to be a major growth driver, with sales rising at double-digit rates over the quarter.
“However, performance was mixed over the period, with sales drying up in the early weeks of the Middle East crisis as it caused severe disruption to service in the region.
“As delivery services in the area returned to normal, sales growth has rebounded sharply, albeit not to the levels seen prior to the conflict.
“Next had previously assumed three months of disruption in the Middle East, which would have added an additional £15million in costs.
“But with no clear end to the conflict in sight, oil and freight prices are expected to remain elevated for some time, and cost guidance has been upgraded to £47million for this year.
“The group expects to fully offset this impact through price increases in the Middle East and cost savings elsewhere in the business.
“Next appears to be sheltering UK consumers from the worst of the impact, with UK price increases not expected to exceed 0.6 per cent.
“Looking ahead, UK sales are set to come up against some tough comparable numbers in the second quarter, with last year’s figures benefiting from exceptionally warm weather and major disruption at M&S.
“While some caution is wise, Next has developed a track record of under-promising and over-delivering in recent years.
“And as a leader in the UK market, it’s better placed than many UK retail peers to navigate a tougher backdrop.”
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