Next raises profit outlook on upbeat Christmas sales

Full price sales at Next in the 54 days from November 1 to December 24, 2017, were up 1.5 percent on last year; an improvement on the company’s November guidance of negative 0.3 percent. Next believes that part of this improvement has been down to much colder weather leading up to Christmas and the company said that better than expected full price sales means that we are marginally upgrading our profit guidance. The company’s central guidance for group profit has therefore been increased by 8 million pounds (10.8 million dollars) to 725 million pounds (985 million dollars) and profit guidance range has been changed to 718 million pounds (976 million dollars) to 732 million pounds (994 million dollars).

Commenting on the company’s upbeat performance, Fiona Cincotta, Senior Market Analyst at City Index told FashionUnited, “Next has brought some good tidings to the retail sector, leading an upcoming deluge of Christmas sales updates with a surprisingly strong performance. The result is far from perfect, with sales at bricks and mortar stores still sliding but the rate of decline has eased. Today's update marks a stark contrast to the profit downgrade announced at the same time last year.”

Next raises profit outlook despite subdued sentiment

Full price sales next year are anticipated to grow by between negative 2 percent and positive 4 percent with the mid-point of positive 1 percent representing a modest improvement on this year's anticipated growth of 0.3 percent. The company further added that if sales do grow at 1 percent, the group profit would be around 705 million pounds (958 million dollars), marginally down on the current year as Next expects operational costs to continue to grow faster than sales. Next expects earnings per share would move forward by 1.1 percent.

Next added that many of the challenges faced last year are expected to continue into the year ahead and subdued consumer demand driven by a decline in real income, the increase in experiential spending at the expense of clothing, and inflation in its cost prices remain challenges for 2018. The company, however expects cost price inflation to reduce to 2 percent in the first half and believes it will disappear in the second half.

“Consistency hasn't been Next's strong point, though, and management is sticking to its cautious tone on the outlook, with a modest fall in profit expected this year. Its guidance for a 300 million pounds share buyback should at least help buttress the shares in what could well be another volatile year,” added Cincotta.

Picture:Next website