Britain's Next raises profit guidance for fifth time in 10 months

Next said full-price sales rose 20% in the eight weeks to December 25 versus the same period in its 2019-20 year

British clothing retailer Next on Thursday beat guidance for sales in the run-up to Christmas, benefiting from a revival in demand for adult formal and occasionwear, and raised its full-year profit outlook for a fifth time in 10 months.

Next, which trades from about 500 stores and online, said full-price sales rose 20 per cent in the eight weeks to December 25 versus the same period in its 2019-20 year, before the pandemic impacted trading. That compares to guidance of a rise of 10.2 per cent.

It forecast a full-year 2021-22 pretax profit of 822 million pounds ($1.1 billion) up from the 800 million pounds previously guided and up 9.8 per cent versus 2019-20.

As the first major British retailer to update on Christmas trading, Next set a high bar for rivals to follow as a strong online performance more than offset another fall in store sales.

Online sales rose 45 per cent, while retail sales in the UK and Ireland fell 5.4 per cent.

The group had expected sales growth in its fourth quarter to be weaker than the third.

However, it said a strong revival in Next branded adult formal and occasionwear significantly improved sales throughout the period.

Next has proved a resilient performer during the pandemic, benefiting from its long-established online operations.

Rivals with weaker or no online business, notably Primark , have seen large falls in sales. Others, such as Topshop-owner Arcadia, and Debenhams have gone bust.

Next said its initial guidance for the 2022-23 year is for full-price sales to rise 7 per cent versus the current 2021-22 year ending January 2022. It estimated its pretax profit would rise 4.6 per cent to 860 million pounds.

The group said pressures on consumers' finances pointed to a tougher trading environment in 2022.

It forecast its prices would rise 3.7 per cent in the first half and 6.0 per cent in the second half due to higher freight rates and increased manufacturing costs.

Next also declared a further special dividend of 160 pence per share, worth 205 million pounds, to be paid at the end of January and said it intends to return to its pre-pandemic dividend cycle in the 2022-23 year.

Next shares, up 9 per cent over the last year, closed Wednesday at 8,038 pence, valuing the business at 10.7 billion pounds.

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