- Budget day upgrade
- Q3 full price sales up 7.6%
- Annual profit guidance hiked to £1 billion
Retail star turn Next (NXT) has raised its year-to-January 2025 profit guidance for the third time in three months after this year’s early arrival of cold weather boosted its third quarter sales.
Shares in the FTSE 100 company ticked up 1.5% to £102 as the fashion giant upgraded its full-year pre-tax profit guidance from £995 million to what will be a record £1 billion and see the retail bellwether break through this profit barrier for the first time.
COLD SNAP SALES BOOST
Full-price sales for the third quarter to 26 October grew by a better-than-expected 7.6% as the early arrival of colder weather this year, versus an unusually warm September and early October last year, boosted demand for Next’s autumn/winter ranges.
However, the clothing and homewares seller does expect a slowdown for the rest of the year.
It bumped up its fourth quarter full-price sales growth estimate by a mere 1% to 3.5% on the reasoning recent cold weather pulled sales forward into Q3.
During the quarter, Next delivered particularly strong UK online sales growth of 7.9%, while overseas online revenues shot up 20.4% and UK retail sales returned to growth at 2.9%.
LEAPING OVER THE BAR
Russ Mould, investment director at AJ Bell, said the UK retail star is ‘an expert at managing expectations, frequently setting the bar low with cautious guidance and then leaping over it. To see full-price sales come in meaningfully above expectations is impressive in an uncertain consumer backdrop - for a change, we’ve got a company thanking rather than cursing the weather gods as chilly temperatures helped it sell higher price tag items like coats and jackets.’
Mould observed that thanks to this latest upgrade, Next is ‘on course to join an exclusive club of UK retailers with the company on track to break through the £1 billion barrier on profits for the first time this year.
‘With the shares in touching distance of all-time highs and some typical caution on display in terms of the outlook it’s perhaps not a surprise to see this update get a reasonably muted response. The next step for Next is to pursue its international ambitions with expansion overseas still in its infancy.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Martin Gamble) own shares in AJ Bell.
