Strong online sales sees Next increase profit forecasts

Fashion retailer Next has raised its profit expectations for the current year to £700m after a strong performance in the opening weeks.

In the first eight weeks of its new financial year, online sales have been “stronger than expected” and are up more than 60% on two years ago.

The company said this overachievement, and its expected sales before stores reopen in a fortnight, are expected to add £30m of profit to its forecasts.

It is also forecasting that its full price sales guidance will be flat against 2019/20, when the group achieved £4.4bn revenues.

Figures published today showed strong online sales meant revenues in the year to January 2021 were down only 17%, to £3.6bn. Pre-tax profits were down by more than half, to £342m, and in line with previous guidance, achieving profits of nearly £1m a day last year despite the huge impact of Covid-19 on the high street.

Next chairman Michael Roney added: “I believe that in difficult times there is a clearer separation between the stronger corporate performers and the weaker ones.

“Our continued investment over many years in our people and our systems has shown resilient results in the past year.”

The company has not proposed a final dividend and its share buyback programme remains suspended. It plans to review its position later in the year “when we have better visibility of our trade once our stores reopen”.

It invested £121m in its online business, accelerating spending on warehousing and systems, and the retailer expects “the shift in consumer behaviour towards online sales to continue for some time”.