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Next sees sales surge due to warm weather and pay rises
https://www.whatjobs.com/news/united-kingdom/uk-business-news/next-sees-sales-surge-due-to-warm-weather-and-pay-rises
By Nithya Bose in UK Business News, posted June 20, 2023
Clothing company Next has experienced a rise in sales thanks to warmer weather and worker pay rises.
This unexpected development has led the company to upgrade its profit forecast for the year.
It has sparked a nearly five percent increase in its share price, making it the top gainer on the FTSE 100.
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Next, under the leadership of its longstanding CEO Simon Wolfson, attributed the sales surge to the recent warmer weather, which came after a wet and cold April.
He said it has prompted customers to refresh their wardrobes with summer clothing.
Additionally, the pay hikes awarded to UK workers at the beginning of the financial year in April likely played a significant role.
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Next said: “In an inflationary environment, annual salary increases deliver a significant uplift in real household income at the time they are awarded.
“We do not think it is a coincidence that sales stepped forward so markedly at a time of year when many organisations make their annual pay awards.”
Despite the continued high annual inflation rate, which stood at 8.7 percent in April, a smaller decline than expected, the monthly inflation figure for April showed a 1.2 percent increase compared to March.
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The retailer argued that if workers received a 5 percent pay rise in April, their real income would increase by 3.8 percent, temporarily placing more money in consumers' pockets.
The significantly improved trading at Next follows a recent warning about the negative impact of the cold and damp weather during early spring and the cost of living crisis.
Other retailers, including Frasers Group, Associated British Foods (parent company of Primark), and Currys, also experienced share price gains in response to Next's update.
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