British retailer Next is upping its full-year financial forecasts as consumers have flocked to stores in recent weeks to get their hands on clothing fit for the UK’s heatwave.
The rosy outlook stoked confidence in investors as its shares rocketed in its early trading and held up highs of 8.2 per cent in the afternoon, lifting its total share price to 8,000.
The company has lifted its profit guidance for the whole year by an additional £30m, to £750m in total.
Full-price sales in the eleven weeks to 17 July grew 18.6 per cent in comparison with sales from two years ago.
“Customers have clearly missed having reasons to shop, so with restrictions easing, plus unseasonably warm weather, means a spark’s been lit under Next’s sales, and it knocked its targets for six in the second quarter,” senior equity analyst at Hargreaves Lansdown, Sophie Lund-Yates, said.
The British high street staple has pinned the positive sales growth on pent-up demand for adult clothing on many customers having made few summer purchases over the pandemic that has kept people indoors.
The company added that travel uncertainty and fewer foreign holidays are likely to have bolstered domestic spending in the UK.
Next also said it expects surplus cash to sit at £240m by the year’s end.
The retailer’s board has decided to declare a special dividend of 110p per share, set to be paid to shareholders on 3 September.
Next added that “It is our intention to return to ordinary dividends in the year to January 2023.”
Due to the pandemic, Next did not pay any dividends to our shareholders last year – but in light of this year’s anticipated cash flow, it has restarted dividend payments.
“Overall, Next has proven to be one of the stronger names in retail. A bricks and mortar retailer that expects surplus cash at the end of the year, and is comfortable enough to pay special dividends is nothing short of a miracle,” Lund-Yates added.