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(Sharecast News) - UK clothing retailer Next once again lifted full year profits guidance and announced a special dividend after Christmas sales exceeded expectations, but warned of higher prices to come and wage inflation.
The company, which habitually under-promises and over-delivers, said full price sales in the two months to December 25 were up 20% compared with pre-pandemic 2019 - £70m ahead of previous guidance and the fifth time in 10 months that numbers have been adjusted upwards - as people bought more formalwear for parties.
Annual pre-tax profit guidance was lifted by £22m to £822m. Next also forecast a 7% rise in full price sales for the year to January 2023 against the current fiscal year and a 4% increase in profit to at £860m.
The board declared a further special dividend of 160p per share to be paid at the end of January 2022 and said it intended to return to its pre-pandemic ordinary dividend cycle in the year ahead.
"In the run up to Christmas our stock levels were materially lower than planned. We also experienced some degradation in delivery service levels as a result of labour shortfalls in warehousing and distribution networks. The fact that our sales remained so robust in these circumstances is, we believe, testament to the strength of underlying consumer demand in the period," the company said on Thursday.
"We have revised our estimates for selling price inflation in the year ahead, mainly as a result of the unanticipated persistence of higher freight rates into the back end of the year ahead, along with some further increases in manufacturing costs."
Next added that it was also experiencing increases in UK operating costs, mainly due to wage inflation, which it expected would be 5.4%, driven by the increase in the national living wage of 6.6% along with wage inflation in sectors where there are labour shortages, most notably in warehousing and technology.
5 Jan 2024 08:57
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