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Next is expected to generate record profits of £1bn this year, after the UK retailer bellwether raised its outlook again thanks to a sales boost from the arrival of colder weather.
The FTSE 100 company, which has 458 stores in the UK, said full price sales rose by 7.6 per cent in the third quarter compared with an unseasonably warm September and early October last year, as shoppers bought warmer clothes sooner. The result was 2.6 per cent ahead of its guidance for the quarter.
The retailer upgraded its annual forecast for the third time in three months in response on Wednesday, and is now expecting to deliver pre-tax profits of just over £1bn on total group sales of £6.27bn.
Next is widely acknowledged as having adapted deftly to major changes such as the shift to online shopping, while other well-known names have disappeared from the high street.
The retailer raised its profit forecast by £15mn in September to £995mn, after finding customers were buying “fewer, better quality things”, having already raised it by £20mn to £980mn the previous month.
Chief executive Lord Simon Wolfson said in September that Next had shown over the years a consistent “ability to weather the storm” and sell the right products across the right platforms, as well as “rigorous financial discipline”.
Total group sales for the full year to January are expected to be up 7.4 per cent on last year, a 2.5 per cent improvement on forecasts of 4.9 per cent growth. Next said its acquisition of 97 per cent of Fat Face and an increased share in Reiss were boosting growth.
Kate Calvert, an analyst at Investec, praised “the company’s consistent performance” but cautioned that there was “more limited upgrade potential in Next than other retailers at this time”. She noted that the company’s growth drivers, such as international sales, were relatively small compared with its more mature UK business.
Richard Chamberlain, an analyst at RBC Capital Markets, said that while Next “should benefit from improving UK real disposable incomes”, it would “remain somewhat sensitive to the outlook for interest rates”.
In September, the company said it was planning to target wealthier shoppers, and was launching a separate website for third-party brands such as APC, which sells clothing that costs hundreds rather than tens of pounds, as well as Ganni, Joseph and Rixo.