Next raises profit guidance after strong first half

1st Aug 2024 07:18

(Sharecast News) - Next raised its profit guidance for the full year by £20m to £980m on Thursday, representing a 6.7% increase compared to last year, following a robust sales performance in the first half.

The FTSE 100 high-street retailer reported that full-price sales in the second quarter were up 3.2% year-on-year, exceeding expectations by £42m.

That was particularly notable given the exceptional summer weather last year, which had led to a forecasted decline of 0.3% for the second quarter.

For the half-year, full-price sales rose by 4.4% compared to the same period last year, surpassing the company's guidance of a 2.5% increase.

Total group sales, which include markdowns, subsidiaries, and investments, grew 8% in the half.

The growth was bolstered by the acquisition of FatFace and an increased shareholding in Reiss, both of which were finalised in the third quarter of last year.

Next put its profit upgrade down to additional sales contributing £11m and cost savings of £9m, primarily in logistics.

Full-price sales in the UK, combining online and retail, were slightly above expectations, rising by 0.4%.

Overseas online sales significantly outperformed, with a 21.9% increase.

Next also reported a return to more typical levels of surplus stock for its end-of-season sale, following a particularly low surplus last year.

The surplus stock was up 21% compared to last year but remained 5% below the levels from two years ago, with clearance rates aligning with internal forecasts.

Looking ahead, Next maintained its guidance for second-half full-price sales to rise by 2.5% year-on-year.

That forecast, although appearing cautious compared to the first half's 4.4% growth, was consistent with growth figures from two years ago.

The company said it expected total group sales for the full year to increase by 6.0%, with a 3.4% rise in Next trading full-price sales, augmented by the contributions from recent acquisitions.

Next said it would announce its interim results for the first half on 19 September.

At 0912 BST, shares in Next were up 8.22% at 9,824p.

Reporting by Josh White for Sharecast.com.