Next raises annual profit forecasts on bumper festive sales
Strong Christmas sales have seen retailer Next up its full year profit forecast range, along with announcing a special dividend.
The festive period saw sales "significantly ahead of expectations", said the UK fashion chain.
Sales from 1 November to 24 December increased 11.9 per cent, and five per cent from a year earlier. Next Retail saw sales up 7.7 per cent over th period.
"Sales for the year to date are now +1.25 per cent ahead of the top end of the guidance we gave in our October", said the store.
It's lifted its profit forecast range to between £684m and £700m, from earlier forecasts of between £650m and £680m.
Next was yet another retailer whose seasonal trade was boosted by online deliveries, with Next Directory being used by customers up until the weekend before Christmas.
Having announced in March 2013 a maximum price for share buyback, the company then saw, from October, shares trading abov this limit. That resulted in it not buying back shares.
The consequent cash surplus means that it's decided to pay a special dividend of 50p per share. This will be paid of 3 February.
From the statement:
In the year ahead, we currently expect to generate and return a further £300m of surplus cash. This will be returned either through further quarterly special dividends or buybacks, depending on the share price.
In essence we are introducing a rolling quarterly special dividend, which will stay in place as long as our share price remains consistently above our buyback limit.
When it comes to the year ahead, the company is optimistic about the steadily improving nature of the economy. It cautions, however, when it comes to consumer spending:
The problem of little or no growth in real earnings looks set to persist for some time, and we cannot see any reason to expect a significant increase in total consumer spending in the year ahead.
We are also wary that any return to significant economic growth is likely to result in rising interest rates which, in turn, is likely to moderate spending of those with mortgages.