Next upgrades guidance again as the company welcomes ‘new phase’
Retail industry bellweather Next has upgraded its guidance by £15m after sales and growth “exceed expectations”, while it vies for £1bn in profit.
The retailer upgraded the profit guidance it issued on 1 August by £15m, to £995m, “as a result of the strength of our full price sales over the last six weeks”. This is the ninth time in a row that Next has upgraded guidance in its market updates.
Next expected sales to grow by 6.6 per cent in the full year, with an extra boost from recent acquisitions of FatFace and an additional share in Reiss.
The retail giant told the market this morning that revenue rose from £2.5bn in the first half of 2023 to £2.86bn in 2024, an increase of 13.6 per cent.
Total sales at the rose by eight per cent year on year, from £2,7bn to £2,9bn, while profit before tax grew by 7.1 per cent, from £422m to £452m.
Like other bricks-and-mortar retailers, Next suffered during the pandemic, and faced seven years in which its retail business would shrink by 18 per cent.
In 2004, retail stores accounted for 72 per cent of the Group’s total sales and 70 per cent of profit. Today, retail accounts for 30 per cent of sales and just 19 per cent of profits.
Next said that the significant changes which occurred during and post the pandemic have now largely stabilised, and that “this year feels like the start of a new phase in the Company’s development”.
It anticipated 9.7 per cent growth in earnings per share, “a number [the company has] not achieved for some time”, it said.
‘Grabbing headlines from the naysayers’
Next said the performance of its overseas business in the first half also exceeded expectations, with full price sales growth of £80m, up 23 per cent. Net margin improved by 0.5 per cent to 14.8 per cent.
Zoe Gillespie, investment manager at RBC Brewin Dolphin, said: “Next continues to buck the retail trend, with profits on track to reach £1bn annually. Although the group has highlighted potential weakness in its UK division – partially explained by poor summer weather – significant growth across its international operations is more than making up for that.
“There may be no further acquisitions planned for the remainder of the year, but Next is in a prime position to seize the right opportunities when they do arise. With inflation falling, consumer optimism on the rise, and an increasingly diversified offering, Next is in a very strong position – which is reflected in the tone of today’s update.”
Richard Hunter, Head of Markets at interactive investor, said: “Yet another set of next-level numbers has underlined the group’s unparalleled understanding of the market in which it operates and its ability to capitalise on new opportunities.
“Next continues to defy any lingering doubts and the strength of its trading performance should rightly grab the headlines from the naysayers who continue to search for chinks in the armour.”