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Next records drop in full year profit but raises forecast

By Prachi Singh

1 Apr 2021

Full price sales at Next plc were down 15 percent and total sales including markdown sales were down 17 percent on last year, while profit before tax dropped to 342 million pounds. The company said that total brand full price sales guidance remains unchanged and flat against 2019/20, while the central profit guidance is raised by 30 million pounds from 670 million pounds to 700 million pounds.

The company added that the anticipated end of the third lockdown in April is two weeks later than expected in its previous guidance. However, the profit lost from those additional two weeks has been offset by the benefit of the extension of business rates relief announced in March.

In the first eight weeks of the year, the company’s online sales surged 60 percent over two years ago. This overachievement plus the expected transfer of sales from retail during the additional two weeks of lockdown, are expected to add 30 million pounds of profit. As a result, Next is raising the central profit guidance by 30 million pounds from 670 million pounds to 700 million pounds.

Review of Next’s full year financial results

The company said, total sales reduced by 736 million pounds, with almost all of this reduction being in the first half of the year. In the second half, the sales lost in retail of 368 million pounds, were almost entirely offset by sales gained online sales of over 364 million pounds.

Markdown sales in the year were down 30 percent, down 41 percent in the first half and down 20 percent in the second half. Markdown sales declined more than full price sales because the company was unable to fully service the mid-season sale event in late March due to the closure of stores and the temporary closure of warehouse.

Next online full price sales for the year were up 13 percent on last year. Full price sales performance in the overseas business strengthened following disruption to sales in the first quarter. Sales in the second half were up 35 percent, with the additional 53rd week boosting this figure by 4 percent. Full price sales in the year were up 16 percent.

In its central scenario for the year ahead, Next is forecasting for online full price sales to be up 31 percent on 2019/20, this represents an increase of 17 percent on last year. Total sales, including markdown and online total platform sales, would be up 30 percent on two years and 18 percent on last year.

Image: Next media gallery