UK’s Next lifts profit forecast as summer sales surge

Mannequins are pictured in the window of a Next clothing store in London March 26, 2009. — Reuters pic
Mannequins are pictured in the window of a Next clothing store in London March 26, 2009. — Reuters pic

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LONDON, July 21 — British fashion retailer Next lifted its profit forecast today after pent-up demand for adult clothes and warm weather helped it smash sales forecasts for the last 11 weeks.

The mainstay of Britain’s shopping streets said full-price sales jumped 19 per cent over the 11 weeks compared with the same period two years ago, before the disruptions of the pandemic, far above its forecast for 3 per cent.

The company said pretax profit for the year to January 2022 would be about £750 million (RM4.1 billion) under its central guidance, an increase of £30 million.

Shares in Next rose 10 per cent in early trade, taking gains in the last 12 months to 60 per cent.

It put the sales surge down to a combination of pent-up demand for adult clothes after 18 months of pandemic restrictions, warmer weather at the end of May and start of June, and an increase in spending as shoppers take fewer holidays abroad and dip into savings built up in lockdowns.

British retailers reported a record annual increase in sales in the three months to the end of June, the British Retail Consortium said earlier this month, with a 28.4 per cent rise on a year earlier and 10.4 per cent on two years ago.

Next, which runs the online Directory business alongside its stores, said it did not expect sales to remain at an exceptionally strong level, but it was optimistic about the second half, when it sees sales up 6 per cent on levels two years ago.

The increase in profit guidance would have been higher had it not decided to repay £29 million of business rates relief, accounting for the time its shops were open. It said it had taken the decision after consulting major shareholders.

Next forecast surplus cash for the year to be £240 million, which it plans to give to shareholders via special dividends. It will pay the first — valued at 110 pence a share — in September. — Reuters