Next posts H1 loss but raises profit outlook on strong trading

Next brand full price sales in the first half of this year were down 33 percent on last year and total sales including markdown sales were down 34 percent, while profit before tax was 9 million pounds. Next plc said in a statement that since full price sales at the beginning of the second half have continued to exceed expectations and the company has revised central scenario for full year profit, up from 195 million pounds to 300 million pounds.

For the first half, Next full price sales were down 62 percent on last year. The company added that in the first six weeks, prior to the period of lockdown, full price sales were down 9 percent. Stores gradually reopened following lockdown and in the last six weeks of the first half, full price sales were down 39 percent and were down 32 percent on a like-for-like basis. Total sales including markdown sales were down 61 percent resulting in a loss of 175 million pounds.

Review of first half performance at Next

The company further said that online full price sales in the first half of the year were down 11 percent with Label UK particularly affected by the lack of demand for occasion and party clothing along with some stock shortages as partners were unable to reinstate orders it had cancelled. Within the Label UK numbers, Lipsy, which is heavily dependent on occasion dresses, was down 48 percent. Excluding Lipsy, Label UK sales were down 12 percent. In the first half, total online sales including markdown sales were down 14 percent and online profit was 128 million pounds, down 28 percent on last year.

Next said, sales in the first quarter struggled across all regions, but in the second quarter the company saw encouraging growth in Europe and the Middle East, up 53 percent and 20 percent, respectively, but the remaining regions have been significantly affected by longer lead times and the increased delivery charges due to restricted flight availability and freight surcharges charged by carriers.

Next Sourcing, Lipsy and the company’s franchise business all experienced significant reductions in sales and profits. As a result, profits from other activities dropped from 14 million pounds last year to a loss of 2 million pounds this year. The company’s franchise partners currently operate 183 stores in 35 countries, and it has one wholly owned store in the Czech Republic. Sales were significantly affected by Covid lockdowns in most of the territories in which the company’s franchise partners operate.

Next revises central profit outlook to 300 million pounds

The company said, in the last thirteen weeks since the stores reopened, Next brand full price sales have been much better, down 2 percent on last year. However, the company believes that recent sales are very unlikely to be indicative of its sales performance for the rest of the year.

Next’s new central scenario assumes that sales will be down 12 percent for the rest of the year and profit to reach 300 million pounds. In its downside scenario, the company assumes that full price sales will be down 34 percent for the rest of the year and profit at 110 million pounds, while the upside scenario assumes full price sales are down 4 percent for the rest of the year and profit of 370 million pounds.

Picture:Next Plc image gallery


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