Next PLC on Thursday lifted annual guidance once again, after sales around the key festive period were better than what the retailer had anticipated.
Next shares were up 4.4% at 8,442.00 pence each in London on Thursday morning.
In the nine weeks to December 30, the clothing and homewares seller’s full price sales were 5.7% higher year-on-year, some £38 million better than its previous guidance. It had expected growth of 2.0% year-on-year. The period forms part of its fourth quarter, which concludes on January 27.
Sales growth accelerated as Christmas got closer. Full price sales rose 10% in each of the weeks beginning December 17 and December 24.
‘Stock has been well controlled. We went into the end-of-season sale with 12% less surplus stock than last year. We expect clearance rates over the life of the sale to be broadly in line with last year,’ Next said.
The company now expects pretax profit for financial 2024 of £905 million, a lift of £20 million from its previous outlook, and it would represent a year-on-year increase of 4.0%. Next had initially expected pretax profit of £795 million, but it has, now on a number of occasions, lifted its bottom line outlook.
‘Of the [latest] £20 million increase, £17 million came from the sales beat to date and £3 million comes from an upgraded forecast for full price sales in January,’ Next said.
Excluding brand amortisation, it expects pretax profit of £914.7 million for the year, a rise of 4.6% from £874.7 million.
It expects full price sales of £4.78 billion for the year ending later in January, a bump from its November outlook of £4.74 billion. It would represent a year-on-year rise of 4.0%.
Looking to the year ending January 2025, the company expects full price sales to increase 2.5% from the expected financial 2024 level. It predicts pretax profit of £941.2 million, a rise of 4.0% from the £905.0 million expected for the current year.
Excluding brand amortisation, it expects pretax profit for next year to amount to £960.0 million, a rise of 5.0% from the £914.7 million predicted for this year.
Looking ahead, it believes wages are rising faster than prices, easing some cost-of-living worries for consumers. Next said core inflation in its product range is abating.
Risk factors, however, include the threat of a weakening employment market, mortgage rates and supply chain risks.
‘Difficulties with access to the Suez Canal, if they continue, are likely to cause some delays to stock deliveries in the early part of the year,’ Next cautioned.
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