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(Alliance News) - Clothing and homewares retailer Next on Thursday reported an expected slump in full-year profit but raised guidance for the year ahead.
Pretax profit in the financial year that ended January 30 more than halved to GBP342.4 million from GBP748.5 million the year before, on total revenue that fell 17% to GBP3.53 billion from GBP4.27 billion. The fall in profit was in line with previous guidance.
Full-price sales were down 15% on the year before.
On recent trading, Next said that online sales have been much stronger than expected in the first eight weeks of the new year, and are up more than 60% on two years ago.
"This overachievement plus the expected transfer of sales from retail during the additional two weeks of lockdown, are expected to add GBP30 million of profit. As a result, we are raising our central profit guidance by GBP30 million from GBP670m to GBP700 million," said Next.
The retailer proposed no final dividend for the recently ended year, though said it remains committed to returning capital to shareholders in the long term and will review its position later in the year when it has better visibility of trade once stores reopen.
"I believe that in difficult times there is a clearer separation between the stronger corporate performers and the weaker ones," commented Chair Michael Roney. "This result is due to the formation of a good management team and the establishment of robust processes during less volatile periods. Our continued investment over many years in our people and our systems has shown resilient results in the past year."
Added Chief Executive Simon Wolfson, "the business has followed the money, developing new ideas bottom up, drawing on innovations generated throughout the group - new product ranges, new businesses, new distribution channels, services, partnerships and markets."
Next shares were up 4.1% early Thursday. The stock has more than doubled since its pandemic low last April.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.4% at 6,740.18
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Hang Seng: up 1.4% at 28,780.84
Nikkei 225: closed up 0.7% at 29,388.87
DJIA: closed down 85.41 points, or 0.3%, at 32,981.55
S&P 500: closed up 14.34 points, or 0.4%, at 3,972.89
Nasdaq Composite: closed up 201.48 points, or 1.5%, at 13,246.87
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EUR: down at USD1.1723 (USD1.1742)
GBP: down at USD1.3769 (USD1.3785)
USD: up at JPY110.77 (JPY110.50)
Gold: up at USD1,716.20 per ounce (USD1,704.21)
Oil (Brent): down at USD63.57 a barrel (USD64.00)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Thursday's Key Economic Events still to come
OPEC and non-OPEC ministerial meeting
0930 BST UK manufacturing purchasing managers' index
0955 CEST Germany manufacturing PMI
1000 CEST EU manufacturing PMI
0830 EDT US jobless claims
0945 EDT US manufacturing PMI
1000 EDT US ISM report on business manufacturing PMI
1000 EDT US construction spending
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The Irish manufacturing sector performed strongly in March, IHS Markit said, as output, new orders and exports all rose solidly and for the first time since the end of 2020. The headline AIB Ireland manufacturing purchasing managers' index surged to 57.1 in March, from 52.0 in February, signalling a marked overall improvement in Irish manufacturing business conditions at the end of the first quarter. Any figure greater than 50.0 indicates overall improvement of the sector, so the latest figures suggest the sector at a faster pace in March. "It also sees Ireland join a global rebound in manufacturing, with the March flash PMI readings for the UK, Eurozone and US all at historically high levels," noted Oliver Mangan, AIB chief economist.
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BROKER RATING CHANGES
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BARCLAYS RESUMES PREMIER OIL, NOW HARBOUR ENERGY, WITH OVERWEIGHT - PRICE TARGET 30 PENCE
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DAVY INITIATES ELECTROCOMPONENTS WITH 'UNDERPERFORM'
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COMPANIES - FTSE 100
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The UK Competition & Markets Authority said it has granted permission to appeal to nine energy companies against modifications made to their electricity and gas transmission, and gas distribution, licences. Among the nine are National Grid Electricity Transmission and National Grid Gas, whose appeals will be joined, the CMA said.
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COMPANIES - FTSE 250
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Wealth manager Quilter said it has agreed to sell Quilter International to Utmost for GBP483 million following a strategic review. The sale will simplify Quilter and focus the company on its higher-growth UK wealth management business, it said. Net cash proceeds of around GBP450 million are expected from the sale. The board said that it is currently minded to undertake a capital distribution to shareholders of the majority of the proceeds. A firm decision on the method of distribution will be made at the time of sale completion. Quilter Chief Executive Paul Feeney said the deal represents an "excellent outcome" for all stakeholders. "It allows us to focus on accelerating our growth and efficiency plans as well as further simplifying and focusing our business around its core UK high net worth and affluent customer proposition," said Feeney. "It also gives us the ability to deliver a further meaningful capital distribution to shareholders."
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Personal protection systems maker Avon Rubber confirmed a modification to an existing US Army Integrated Head Protection System low-rate initial production contract to increase the value by an estimated USD28.4 million. As part of the modification, the US Army has placed an order under this contract worth USD18.9 million, with deliveries expected to commence in Avon's current financial year.
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COMPANIES - MAIN MARKET AND AIM
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Financial services administration outsourcer Equiniti swung to a loss for 2020 and also said its chief financial officer will be departing once a replacement is installed. Revenue for 2020 fell 15% to GBP471.8 million, and the company swung to a pretax loss of GBP6.6 million from a GBP39.8 million profit. Equiniti blamed a "very challenging environment" with disruption to capital markets and the wider economy hitting its performance. There was a significant reduction in higher-margin market-paid and discretionary projects as market activity paused, it said, and the fourth quarter was slower than expected. Interest rate cuts and other actions by central banks reduced Equiniti's interest income by GBP16.9 million. No dividend was declared for 2020, compared to a payout of 5.49p for 2019. Paul Lynam starts as Equiniti's new chief executive on Thursday. His appointment was announced in January, succeeding Guy Wakeley who had been in the role since 2014. Equiniti also said that Chief Financial Officer John Stier plans to step down. He will remain in the role until a successor is found and a smooth handover completed.
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South32 said it has changed the terms of its South Africa energy coal divestment agreement after key information regarding negotiations with Seriti Resources and Eskom ceased to be confidential. On Monday, South32 said it now expects the transfer of its shareholding in South32 SA Coal Holdings to Seriti to complete following the end of the March quarter. Previously, South32 said it was on track to close the transaction during the March quarter. The deal was agreed back in November of last year, when South32 said it would sell its 92% holding in the coal subsidiary for an upfront payment of ZAR100 million. The consideration also included a deferred payment, with South32 expecting to receive a portion of the cash flow generated by the unit, capped at ZAR1.5 billion. In addition, South32 would earn 49% of cash generated between the completion of the transaction and March 2024. On Thursday, South32 said it has amended the original agreement by adjusting the up-front cash payment to a nominal consideration and removing the deferred consideration. The terms related to the 49% of earnings from operations were not changed. The Perth, Western Australia-based mining company said it also has entered into a USD50 million facility with a subsidiary of Seriti that will primarily fund costs to be incurred for the restructure of some loss-making mining areas. In addition, South32 has agreed to provide USD200 million to fund rehabilitation activity. The facility is expected to be drawn down before the end of 2022 and is repayable over a ten-year period. South32 CEO Graham Kerr said: "Securing the long-term sustainability of South Africa energy coal has been our key objective in transitioning the business to black ownership, consistent with South Africa's transformation imperative. This additional support package moves us closer to completion of the sale and will enable the business to continue to operate safely and sustainably into the future for the benefit of its employees, customers and local communities."
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Thursday's Shareholder Meetings
Primary Health Properties PLC - AGM
Scottish American Investment Co PLC - AGM
St Modwen Properties PLC - AGM
URU Metals Ltd - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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