Next raises profit forecast after strong quarter

LONDON, United Kingdom - Next, Britain's second biggest clothing retailer, raised its guidance for annual sales and profit for the second time in three months after a strong second quarter performance, helped by favourable weather and new store openings.

The group, which trades from over 500 stores in Britain and Ireland, about 200 stores overseas, and through its Directory internet and catalogue business, said it now expected a 2014-15 pretax profit of 775-815 million pounds.

That compares to previous guidance of 750-790 million pounds, and would represent growth of 11-17 percent on the 695 million pounds made in 2013-14.

Next said on Tuesday its total sales rose 10.7 percent in the 26 weeks to July 26, having been up 10.8 percent in the first quarter. Store sales rose 7.5 percent, while Next Directory sales were up 16.2 percent.

Next raised its full year sales guidance to 7-10 percent from 5.5-9.5 percent previously.

Shares in Next, which have risen 38 percent over the last year, closed Monday at 6,520 pence, valuing the business at 10 billion pounds. Next has generally been able to defy a tough macro economic background helped by its strong online offer, new store openings and diversification into new product areas, such as homewares, as well as new overseas markets.

"It might appear overly cautious to forecast a full-year sales range which is below our current rate of growth," said the firm.

"However, last year’s first two quarters were hampered by a particularly cold Spring and Easter which presented a soft comparison for this year."

It said second-half comparative numbers are tougher, particularly in the fourth quarter. It forecast second-half sales growth in the wide range of 4-10 percent.

The group forecast full year growth in earnings per share of 12-18 percent, up from 8-14 percent previously.

So far this year Next has paid or declared 223 million pounds of special dividends and returned 105 million pounds through share buybacks.





(Reporting by James Davey; editing by Kate Holton and Paul Sandle)


 

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