Next does it again: Profit forecasts upgraded for FIFTH time in a row
Next has raised its profit guidance for the fifth time in a row thanks to a bumper Christmas trading period.
In a trading update this morning, the fashion favourite said it expects profit before tax for the year to increase by £20m to £905m.
The retail giant said In the nine weeks to 30 December, full price sales were up 5.7 per cent versus last year. This was £38m better than its previous guidance for the period.
Next, led by City grandee Lord Simon Wolfson, also credited a reduction in stock for its strong performance.
The retailer headed into the end-of-season sale with 12 per cent less surplus stock than last year.
The fashion brand, which has made a name for itself in recent years snapping up ailing retailers, said it expects full price sales for next year to rise four per cent to £4.78bn.
However the company raised concerns that blocks in the Suez Canal – an important trade route in Egypt – could lead to delays in its stock delivery.
Next said: “Difficulties with access to the Suez Canal, if they continue, are likely to cause some delays to stock deliveries in the early part of the year.”
And hikes to the minimum wage are also likely to bring higher costs next year.
The company’s share price shot up by five per cent as the London market responded to the news.
“The largest cost increase (in 2024) will be wage inflation, which we expect to be around £60m,” the business said in its update this morning.
“Within this, around £25m is the difference between the expected rate of general UK wage inflation, and the rise in the National Living Wage.”
Charlie Huggins, manager of the ‘Quality Shares Portfolio’ at Wealth Club, said: “Next has pulled yet another rabbit out of the hat today, leading to a further upgrade to its full year sales and profit guidance. It has demonstrated once again why it is considered one of the best run retailers around.”
“The future for Next looks bright and is reflected in the group’s guidance to grow sales and profits again in the year ahead. “
He added: “Next’s core proposition is clearly resonating with the UK consumer and is being augmented by intelligent acquisitions of brands like Fat Face. With inflation falling and wages rising, the economic picture also looks a lot less bleak than at the start of last year.”