UK's Next raises forecast to put 1 billion pound profit in sight

Reuters

UK's Next raises forecast to put 1 billion pound profit in sight

Sep 19, 2024 at 6:26 am GMT

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First-half pretax profit up 7.1% to 452 mln stg

Raises second half sales growth guidance to 3.7%

Raises full-year profit guidance to 995 mln stg

Shares up 5%

Adds shares and details in paragraphs 2-4 and 9-12

By James Davey

LONDON, Sept 19 (Reuters) -British clothing retailer Next NXT.L said on Thursday it was on track to make an annual profit of almost 1 billion pounds ($1.3 billion) as it raised its forecast for the second time in two months after better than expected recent trading.

Its shares opened up 5%.

With more than 800 stores in the UK and Ireland and nearly eight million online customers, Next is often considered a useful gauge of how consumers are faring.

It also has nearly two million overseas customers buying through its website and many more who buy its products via third party websites, or so-called aggregators.

The group reported a 7.1% rise in pretax profit for January-July on a 4.4% increase in full-price sales and said full-price sales in the first six weeks of its fiscal second half had "materially exceeded" its expectations and were up 6.9%.

As a result, Next upgraded its forecast for second-half sales growth to 3.7% from previous guidance for a 2.5% rise.

It also now expects full-year profit before tax of 995 million pounds, ahead of previous guidance of 980 million and an 8.4% increase on 2023/24.

Next navigated a difficult half for the clothing sector, with an unseasonably cold spring and a cool and wet early summer, while the cost of living crisis has continued to weigh on spending on non-essential items.

The group particularly benefited from a step-up in overseas online sales.

Rivals Primark ABF.L, John Lewis, Zara owner Inditex ITX.MC and H&M HMb.ST have all highlighted the impact of unseasonal weather on sales.

Next said average selling prices this year, on comparable items, were "slightly down" on last year.

Shares in the company, considered by analysts to be one of the best run retailers in Britain, have risen by nearly a half over the last year, hitting a record high this week.

($1 = 0.7545 pounds)

Reporting by James Davey, Editing by Kate Holton and Mark Potter

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