Next: High street champion trades ahead of expectations again
Fashion retailer Next has traded ahead of expectations again, reporting a record pre-tax profit of £918m during the full year.
This is three million pounds ahead of the guidance of £915m given in January, largely due to better-than-expected clearance rates of sale stock in the Christmas sales.
Total group sales grew slightly by 5.9 per cent to £5.8bn and statutory revenue was up 9.1 per cent to £5.4bn.
For the year ahead, the firm said it expects profit guidance to reach £960m, up four per cent from what was previously expected.
Shares in the high street bellwether were up nearly five per cent in early trade.
Next also said hard-pressed shoppers could expect a “small reduction” in selling prices in the year ahead, despite the business facing a £60m hit from rising wage bills.
The firm led by City grandee Lord Simon Wolfson, previously flagged concerns that blocks in the Suez Canal – an important trade route in Egypt – could lead to delays in its stock delivery.
Today the firm said it does not currently anticipate any material adverse impact from stock delays.
Next said: “On average, transit times have been extended by 7-10 days and our product teams have adjusted the timing of their contract bookings to account for this delay.
“In addition, higher freight costs have been factored into our prices going forward but we still anticipate that our prices will fall.”
During the year, the firm returned £425m to shareholders through a combination of dividends worth £248m and share buybacks worth £177m.
Wolfson has spent the last four years transforming Next’s reputation from frumpy high street stores into one of the strongest players in both the digital and physical retail space.
Analysts at Liberum agreed to rate the business a ‘Hold’ this morning.
They said: “We think Next will continue to be a long-term winner in the UK fashion and home retail market as competition continues to weaken or exit the market.”
Adam Vettese, analyst at investment platform eToro, added: “We’ve heard of many retailers having to contend with disruption to shipping due to geopolitical tension but Next has said this will not be a significant factor.
“This is good news for shareholders but more importantly Next will continue to funnel cash back to them in the form of dividends and share buybacks as they have done consistently in recent years.”
He added: “Given that we should see macro factors ease as the year goes on with the first rate cuts approaching and Next already trading at record highs, it’s hard to see anything that could halt the momentum at this point.”