Next raises profit forecast after Christmas sales surge

Next has upgraded its full-year profit guidance for the fifth time in eight months after sales over the golden quarter performed better than anticipated.

Compared to predictions of a 2 per cent growth, full-price sales increased 5.7 per cent in the nine weeks ending 30th December.

This means that the company increased its pre-tax profit projection for the current year by £ 20 million to £ 905 million, or 4 per cent more than last year. Additionally, full-price sales of £ 4.78 billion should increase by 4 per cent.

However, the company is being cautious about its sales projections for the upcoming fiscal year and stated that full-price sales on continuous business could increase by a lesser 2.5 per cent in the upcoming year, even after taking into account recent acquisitions, which should result in a 6 per cent increase in group sales including subsidiaries.

In retrospect, the business said that online sales increased by 9.1 per cent (and by 7.7 per cent for the second half of the year ending on 30th December). Retail sales have increased by 0.6 per cent in Q4 thus far, but have remained unchanged in the second half.

Sales were positive each and every week in November and December, with the exception of the week starting on December 10th, when they were down 2 per cent.

Despite having 12 per cent less excess inventory when the clearance season began than the prior year, the company stated that clearance sale rates should be roughly in line with those of the previous year.

It declared that going forward, the amortisation of the brands it purchases will not be included in its reported earnings. Additionally, it will begin eliminating them for the current year in order to facilitate comparability. This adjustment results in a £ 10 million increase in the headline profit for the current year (bringing it from £ 905 million to £ 915 million) and an additional £ 19 million for the following year.

The business anticipates staying as active in the acquisition market as it has been in recent years. Keeping an eye on its main operations, it projects 2.5 per cent more full-price sales for the core Next company (which comprises Retail, Online, Label, and Next Finance interest income).