International sales did the heavy lifting for Next in its third quarter. Full-price sales rose 8.1% in the 13 weeks to 31st October, £33m ahead of its 5.8% guidance, and all of the outperformance came from outside the UK.
International online sales grew 32.2%, well ahead of the 20.5% Next had expected. Sales through third-party aggregators rose 31.3%, close behind the 32.7% growth on Next’s own international websites.
UK growth was much slower. Sales rose 2.0%, in line with guidance, though Next said trading had been volatile and unseasonably warm weather held back sales in September. UK online sales grew 4.4%, while store sales fell 1.7%.
The Next brand grew just 2.2% online. Most of the online growth came from wholly-owned brands and licences, up 18.9%. Third-party brands sold on the Next website rose 4.0%, which is still faster than Next’s own label but well down on the 9.5% they managed in the first half.
STAY AHEAD OF UK ECOMMERCE
Found this useful? This is one of dozens of updates like it we track every week. Get the ones that matter to UK sellers in your inbox, twice a week – free.
Overseas orders are also costing more to fulfil. Next expects new EU tariff measures to add around £5m to its net costs this year, after other savings. The measures came in on 1st July and 1st November and apply to online orders fulfilled from stock held outside the EU, including orders shipped from Next’s UK warehouses.
In response, Next plans to hold more stock inside the EU through ZEOS, Zalando’s logistics arm, and to adapt its operations. It will also raise some EU prices over time, modestly and selectively.
Costs are already offsetting some of the international gains. Next said the extra £5m of profit from the sales beat was cancelled out by higher international operating costs. Marketing spend on Next Direct is up 67% on last year, against a planned 42%.
The retailer has raised its full-year full-price sales guidance to £6.03bn, up 7.3%, from £6.00bn. Group profit before tax guidance is unchanged at £1,255m.
Full-price figures exclude markdown sales and Total Platform commission. The quarter is also compared against offset weeks, because last year had 53 weeks. Next will report again in its Christmas trading statement on 6th January, covering sales up to 26th December.
