Next Shares Rise 3% As Full-Year Estimates Hiked

Next shares rose in value on Thursday after the retailer increased its full-year sales and profits guidance.

At £106.05 per share, the FTSE 100 company was last dealing 2.6% higher on the day.

In its half-year trading statement, Next said that sales rose 8% between February and July, to £2.9 billion. This was driven by sales of full-price items increasing 4.4% from the same 2023 period.

As a result, pre-tax profit moved 7.1% higher, to £452 million.

Next said that sales in its core UK marketplace increased just 1% year on year, to £1.9 billion. Meanwhile, Next-branded sales reversed 0.9%, a result the retailer described as "potentially worrying and [which] warrants further analysis."

It predicted that this underperformance "was mainly because our fashion ranges did so well during the exceptionally warm weather last year."

The firm added that "the sharp recovery in the last six weeks, as weather comparatives have materially turned in our favour, is confirmation of this theory."

Overseas sales shot 22.8% higher in the first half, to £433 million.

Forecasts Raised

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Next said that an impressive start to the second half has prompted it to upgrade its forecasts for the full financial year.

The retailer noted that full-price sales growth of 6.9% in the first six weeks of the second half "have materially exceeded our expectations."

It now expects second-half corresponding sales to rise 3.7%. This is up from prior growtidance of 2.5%.

Consequently Next now tips full price sales to increase 4% for the 12 months to January 2025, to £5 billion. Earlier forecasts suggested a 3.4% year on year increase.

Total sales are estimated to rise 6.6%, to £6.2 billion. This is up from the 6% increase that was previously tipped.

Pre-tax profit is now estimated at £995 million, up 8.4% year on year. Profits were earlier expected to ring in at £980 million, a 6.7% annual increase.

This is the second guidance improvement in as many months. Next raised its pre-tax profit estimates from £960 million in early August.

Resilient Performance

Analyst Neil Shah of Edison Group commented that "these results highlight Next’s ability to navigate a competitive retail environment, supported by strong online growth and steady retail performance."

He noted that "the company’s long-term strategy continues to focus on broadening product offerings, expanding its online and international presence, and leveraging its infrastructure through new brands and investments like Total Platform."

Next’s Total Platform business service allows other companies to use the company’s infrastructure. This includes the retailer’s online systems, logistics, warehousing and customer service.

Shah added that "the shift toward online sales and non-Next branded products continues to shape its evolving business model," which in turn "[provides] multiple avenues for future expansion."