Next raises profit forecast but warns stock could be delayed by Red Sea attacks
The high street retailer now expects to make pre-tax profits of 拢905m in 2023/24, up 拢20m on its previous estimate. The clothing giant also predicts sales will rise again next year but warned attacks on shipping going to and from the Suez Canal could hit its supply chains.
Thursday 4 January 2024 17:13, UK
Next has raised its profit forecast for the fifth time in less than a year after reporting better-than-expected sales in the run-up to Christmas.
The high street retailer said full-price sales were up 5.7% in the nine weeks to 30 December compared to last year.
The figure, revealed in a trading update from the firm on Thursday, is £38m better than the 2% rise it previously forecast for the period.
As a result, Next said it was upgrading its pre-tax profit guidance for 2023/24, not including exceptional items, by £20m to £905m.
That would represent a 4% rise on the £870m it made in 2022/23.
The chain, which has around 460 stores in the UK and an online presence in dozens of countries abroad, reported particularly strong website sales, which increased 9.1% in the nine weeks to the end of last month.
Next said it expects full-price sales to rise 2.5% in 2024/25, and pre-tax profit to increase by 5%.
The company said rising wages were likely to ease cost of living pressures on shoppers in the new year, while it also aims not to rise prices for like-for-like goods thanks to falling manufacturing costs.
Its trading update said: "On the face of it, the consumer environment looks more benign than it has for a number of years, albeit there are some significant uncertainties."
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Risk factors identified by Next for the new year include a potential rise in unemployment which could hit sales.
The chain also cautioned that rising tensions resulting from the Israel-Hamas war and attacks on shipping in the Red Sea could hit its supply chains.
"Difficulties with access to the Suez Canal, if they continue, are likely to cause some delays to stock deliveries in the early part of the year," the trading update warned.
Charlie Huggins, a manager at investment firm Wealth Club and a Next shareholder, said the company had "pulled yet another rabbit out of the hat" and claimed the figures "demonstrated once again why it is considered one of the best run retailers around".
He added: "Next's core proposition is clearly resonating with the UK consumer and is being augmented by intelligent acquisitions of brands like Fat Face.
"With inflation falling and wages rising, the economic picture also looks a lot less bleak than at the start of last year."
Shares in Next closed 5.8% higher.