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LONDON (Alliance News) - Homeware and clothing retailer Next PLC Thursday reported higher profits and revenues for its recent financial year, driven by its online business
Next signalled its confidence by raising its dividend by 23%, but said it expects the UK consumer environment to remain far from buoyant.
Although the retailer said the consumer economy steadily improved over the course of the last year, it remained fairly cautious on the UK consumer spending outlook, targeting brand sales growth of between 4% and 8% in the current financial year, with a pretax profit of between GBP730 million and GBP770 million.
For the year ended January 24, Next increased its full-year dividend by 23% to 129 pence, in line with earnings per share growth. Revenue excluding VAT increased 5.4% to GBP3.74 billion, up from GBP3.55 billion the prior year, and profits excluding exceptional costs rose 12% to GBP695.2 million, up from GBP621.6 million a year earlier, when excluding a GBP44.9 million profit gain.
"Growth has been driven through a combination of improved pricing, site translations, the acceptance of new domestic currencies and the development of new territories," the company said in a statement.
Next said revenue and profit during the year was driven by a strong trading performance from its home shopping and online business called Next Directory. Next Directory delivered a 12% increase in revenue for the year and a 19% increase in profits, largely driven by its UK online business.
It said that Directory active customer numbers increased by almost 11% during the year to 3.7 million, with growth coming from UK credit, UK cash and overseas customers.
The retailer has been busy developing its online business, by improving its UK services and investing in overseas markets.
"We continue to make good progress developing our internet business overseas. All overseas sales are currently serviced from our UK warehouses through third party distribution networks," it said.
Total retail sales from its stores were 1.7% ahead of last year, of which new space contributed 3.1%.
Next said full-price sales grew by 2.9%, while markdown sales were down 11%, as a result of stock for its big end-of-season sale being 15% lower than the year before, due to a last minute sales surge immediately before the summer and winter sales. However, Next said its expects markdown levels to return to "more normal levels" in the year ahead.
During the year, the retailer increased trading space by 280,000 square feet or 4%, largely from extending and re-locating in existing trading locations. However the number of stores barely changed, after it opened 11 new stores, but closed 10 smaller less profitable shops.
Next also said that its franchise business, with partners operating 173 stores in 35 countries, continued to grow both sales and profits during the year.
"We are budgeting for international retail to make a profit of GBP14 million in the year ahead," the company said.
Next shares were trading 1.7% higher after the market open Thursday, at 6,689.67 pence per share.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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