Next raises its profit forecast again to €1.2bn
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Next has said it expects to report annual profit in excess of £1bn (€1.2bn) for the first time in its history in its current financial year, underscoring the success of the British retailer.
The group raised its outlook for the third time in three months after a better-than-expected 7.6% rise in full-price sales in the third quarter to October 26.
This was driven by the early arrival of colder weather this year, versus an unusually warm September and early October last year.
Breaking through the £1bn profit mark would highlight Next’s position as one of Britain’s best-run retailers, with a successful recipe that combines more than 800 stores in Ireland and the UK, and nearly 8m online customers.
While other familiar retail names, such as Debenhams and BHS, have disappeared from British shopping streets, Next adapted early to the shift to online sales.
It also has nearly 2m overseas customers buying through its website and many more who buy its products via third-party websites, so-called aggregators.
The strong performance, which puts it in the ranks of supermarket Tesco and clothing and food retailer Marks & Spencer as British retailers to have made a profit of over £1bn, has sent its shares up by 48% over the last year, hitting a record high in September.
The stock was up 1.4% on Wednesday.
Analysts at RBC Capital Markets said:
However, they noted that with around 85% of Next’s sales coming from the UK it remains leveraged to the UK consumer outlook, and potentially a softer employment outlook.
Next, which is considered a useful gauge of how consumers are faring, raised its guidance for the fourth quarter by one percentage point to 3.5%.
It said the improved sales in the third quarter along with its forecast for the fourth quarter added £43m to full-price sales and £10m to profit.
That took its profit guidance for the 2024-25 year from £995m to €1.005bn.
Analysts have pointed out that autumn 2024 is the first season in more than 18 months that has delivered something close to expected UK weather patterns. Autumn 2023 was unseasonably warm making year-on-year comparisons favourable.
Official data published earlier this month showed UK retail sales unexpectedly rose in September.
- Reuters