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(Alliance News) - Clothing and homewares retailer Next on Wednesday raised its profit guidance and promised shareholders a special dividend early next year.
For the six months to July 31, revenue was GBP2.12 billion, up 5.2% from GBP2.01 billion at the same time in 2019, and pretax profit was GBP346.7 million, up 5.9% from GBP327.4 million. Compared to last year, Next swung to a pretax profit from a loss of GBP16.5 million.
Next explained it is providing direct comparisons against the relative period two years ago as disruption to last year from Covid meant that "one year comparisons are generally not meaningful".
The retailer said full price sales in the past eight weeks were up 20% versus 2019, "materially exceeding" expectations. This was higher than with its previous guidance for the second half of its financial year of 6%.
Turning to shareholder payouts, Next did not declare an interim dividend. However, it said it remained committed to its long-term policy of returning surplus cash.
"It is our intention to distribute any remaining surplus cash generated this year as a second special dividend at the end of January 2022. Any further dividends will be announced in our Christmas trading statement on Thursday 6 January 2022. We currently plan to return to ordinary dividends in the year to January 2023," it said.
Looking ahead, Next said it is increasing its full price sales guidance for the year ending January 2022, to be up 10% against 2019. The company added that the longer-term outlook "appears to be more positive than it has been for many years".
Next said it now expects a pretax profit for the full year of GBP800 million, up 6.9% versus 2019 and GBP36 million ahead of its previous guidance.
"Historically Next has had the habit of cautious projections being followed by far superior results, and these numbers are no exception," commented Richard Hunter, head of Markets at interactive investor.
"Next is a tightly run ship which is able to respond to a fluid trading environment both in terms of evolving fashion trends as well as financial challenges," Hunter added. "The company is not only exceeding pre-pandemic levels of trading, but has also demonstrated that the measures it has taken in the interim leave it strongly placed to benefit from the new environment."
Next shares were up 3.6% early Wednesday. They are up 17% so far in 2021.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.6% at 7,070.12
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Hang Seng: up 0.2% at 24,552.47
Nikkei 225: closed down 2.1% at 29,544.29
DJIA: closed down 569.38 points, or 1.6%, at 34,299.99
S&P 500: closed down 2.0% at 4,352.63
Nasdaq Composite: closed down 2.8% at 14,546.68
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EUR: flat at USD1.1681 (USD1.1684)
GBP: down at USD1.3517 (USD1.3545)
USD: up at JPY111.40 (JPY111.27)
Gold: flat at USD1,739.02 per ounce (USD1,739.12)
Oil (Brent): down at USD77.76 a barrel (USD79.00)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
1100 CEST EU business & consumer surveys
0930 BST UK mortgage approvals
0700 EDT US MBA weekly mortgage applications survey
1000 EDT US pending home sales index
1030 EDT US EIA weekly petroleum status report
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Troops will begin training to help deliver petrol supplies as UK Prime Minister Boris Johnson said he was making preparations to deal with potential problems until "Christmas and beyond". Johnson said the situation on the filling station forecourts is "stabilising" as he urged motorists to go about their business in the normal way. A decision to put 150 military drivers on standby has been formally approved, meaning they can begin training in case they are required. A further 150 drivers' mates are also ready to help out as part of the military effort. "They're still on standby but can now start training now it's approved," a UK government source told PA.
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UK retail shops lowered prices at the slowest pace annually since the start of last year, as rising cost pressure was pushed onto consumers. Shop prices declined by 0.5% year-on-year in September, according to the latest British Retail Consortium-NielsenIQ shop price index. The rate of decline was slower than August's 0.8% fall and was the slightest fall since January 2020. The average decrease over the past 6 and 12 months were 0.8% and 1.4%, respectively. Non-food deflation slowed to 1.0% in September from 1.2% in August. Food prices rose 0.1% in September, following five months of deflation, including a 0.2% drop in August. Fresh food deflation, meanwhile, eased to 0.4% in September from 0.6% in August.
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Former Japanese foreign minister Fumio Kishida is set to become the country's new prime minister after he won Wednesday's leadership election for the ruling Liberal Democratic Party. He is expected to succeed Yoshihide Suga as Japan's premier on Monday, based on the LDP majority in the lower house of parliament. The 64-year-old beat Taro Kono, the minister for the coronavirus vaccination campaign, for the top party job in a run-off vote. Suga threw in the towel as Japan's leader after just one year in power after garnering much criticism for his handling of the coronavirus crisis and unpopular decision to go ahead with the Olympics despite the pandemic. Kishida will have to work quickly to improve the party's tarnished image among Japan's public, because the election for parliament's lower house is already scheduled for November.
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BROKER RATING CHANGES
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GOLDMAN SACHS RAISES LLOYDS BANKING TO 'NEUTRAL' (SELL) - PRICE TARGET 49 (45) PENCE
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DEUTSCHE BANK RAISES IAG TO 'BUY' (HOLD) - PRICE TARGET 260 (225) PENCE
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RBC RAISES ANGLO AMERICAN TO 'OUTPERFORM' (SECTOR PERFORM) - PRICE TARGET 3,450 PENCE
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RBC CUTS BHP GROUP TO 'SECTOR PERFORM' (OUTPERFORM)
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COMPANIES - FTSE 100
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Electricity distributor SSE said its Renewables unit has signed an agreement with Pacifico Energy, one of Japan's largest developers of renewable energy, to create a joint ownership company that will pursue offshore wind energy development projects in Japan. SSE explained the creation of the joint ownership company involves the acquisition by SSE Renewables of an 80% interest in an offshore wind development platform from Pacifico Energy for USD208 million. Separately, SSE said it remains focused on long-term, sustainable financial performance and remains confident about delivery of solid financial performance for the full year. It expects to report adjusted earnings per share in the range of 7.5p to 10p for the half-year to September 30. SSE also expects to pay interim dividend of 25.3p, in line with 80p plus RPI annual inflation.
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COMPANIES - FTSE 250
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Station food outlet operator SSP Group expressed confidence in its prospects amid signs that the travel sector is now starting to recover. SSP said third quarter revenue improved to 27% of 2019 levels and fourth quarter revenue is expected to be at 47%, resulting in second half revenue of 37% of 2019 levels. The Upper Crust-owner highlighted that domestic travel, which accounts for around 60% of revenue, and leisure travel, also 60%, is recovering more rapidly than international and business travel. This has meant recovery in the fourth quarter has enabled it to re-open 60% of its outlets, up from 30% at the end of the first half of 2021. SSP said the travel sectors in North America and continental Europe are recovering faster than travel in the UK. Looking ahead, SSP noted stronger trading and cash flow performance in the second half of the 2021 financial year was "encouraging". Its medium-term outlook of a return to pre-Covid levels of like-for-like revenue and of earnings before interest, tax, depreciation and amortisation margins by 2024 remain unchanged. However, SSP anticipates a slightly slower recovery in sales during the 2022. SSP said "our expectation for profit conversion on reduced sales in 2022 compared to 2019 continues to be at the upper end of a range of 25% to 30%."
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Wednesday's Shareholder Meetings
AO World PLC - AGM
Frasers Group PLC - AGM
FRP Advisory Group PLC - AGM
Fulcrum Utility Services Ltd - AGM
Fulham Shore PLC - AGM
Global Ports Holding PLC - AGM
Great Eastern Energy Corp Ltd - AGM
Novacyt SA - AGM
Scholium Group PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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