Next predicted profits this year of £850million (Image: PA)
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But the fashion and homeware giant said it is still on course to make predicted profits this year of £850million.
At its first-quarter trading update, it said that the reopening after lockdown resulted in shop sales rocketing 285 percent. This made up for online revenue sliding 11 percent.
Its sales for the three months to the end of April were 19.5 percent higher than they were for the same period pre-pandemic, with online growth of 47 percent offsetting an eight percent drop in store sales.
Earlier this year Next chief executive Lord Wolfson warned that the cost-of-living crisis could slow its sales.
Its full-price sales grew by more than 20 percent in the first quarter but the company said that it believes they will drop to 0.8 per cent over the second to fourth quarters.
However, Next has maintained its March forecast that its pre-tax profits for its 2022-23 financial year will rise 3.3 percent to £850million. The year before it made a £823.1million profit, a 140.4 percent increase on 2020-21. Steve Clayton, at Hargreaves Lansdown, said that markets were relieved that Next has maintained its profit forecasts.
He said: “Markets were concerned that it would be struggling with costs and availability of a product, putting margins under pressure, even before customers struggled with the squeeze on incomes.”
“Instead, it reiterated its guidance from March, suggesting that its cost controls are succeeding.”
Shore Capital analyst Eleonora Dani said: “After Boohoo and Joules’ profit warnings and the slight miss from Zalando, it is reassuring to see bellwether Next announcing a solid first quarter-trading statement.”
She added that if Next’s sales grow 0.8 percent over the rest of the year as it expects, that will be due to higher prices rather than increased sales volumes.
Elsewhere, data from the British Retail Consortium and Sensormatic Solutions shows a return to shops. In April footfall was down 13.1 percent compared with pre-Covid, a 2.3 point rise on March.