British clothing retailer Next upgraded its full-year profit forecast after it beat guidance for sales in the run-up to Christmas, as colder weather helped sales of winter clothes.
Next, the first major listed retailer to update on Christmas trading, did, however, caution on Wednesday that many of the challenges it faced in 2017 look set to continue in 2018.
It said subdued UK consumer demand driven by a decline in real income, the increase in spending on leisure at the expense of clothing, and inflation in cost prices all remain difficult.
Next, which trades from more than 500 stores in the UK and Ireland and the Directory internet and home shopping business, has been Britain’s most successful clothing retailer this century in terms of profits but has faltered over the last two years due to a shift in spending away from clothing towards holidays and entertainment. Its shares have fallen 7 per cent over the last year.
Full-price sales
Next said total full-price sales rose 1.5 per cent in the period from November 1st to December 24th, the bulk of its fourth quarter. That was ahead of company guidance for a fall of 0.3 per cent and follows third quarter growth of 1.3 percent.
Next had flagged that comparative sales numbers with last year were much more demanding in the fourth quarter than they were in the third. The retailer upgraded its central pretax profit guidance for the full 2017-2018 year, forecasting £725 million, up from previous guidance of £717 million but below the £790.2 million made in 2016-17.
Next forecast full price sales growth of about 1 per cent in the 2018-19 year and another fall in profit to £705 million, with costs growing faster than sales.
– Reuters
