Last checked at 
(Alliance News) - Next PLC on Wednesday announced its second-quarter sales were "much better than expected" but still a far cry from last year's second quarter results.
The FTSE 100-listed clothing retailer said its online warehouse picking and dispatch capacity returned to normal levels quicker than expected and UK and Ireland stores are now open for business.
As a result, full price sales including interest income for the second quarter ended July 25 were were "significantly" ahead of expectations, down 28% compared to the year prior. Online sales were up 9%, while retail store sales were down 32% on a like-for-like basis.
In the first half as a whole, sales were down 33% on a year before, with online sales down 11% and retail store sales down 62%.
Next has modelled three new scenarios based on full price sales for the full year being down 18%, 26% and 33%. The company said the middle scenario is what is expected at this time assuming sales are down 19% in the second half.
Next expects full year pretax profit to be GBP195 million, following the central scenario. This is a stark contrast to the GBP734 million expected in pretax profit in January earlier this year and the GBP748.5 million recorded in financial 2020.
Next said: "There is still much that remains uncertain and our central scenario cannot be accorded the same degree of confidence that our guidance would normally receive at this time of year.
"The duration of social distancing rules, post-lockdown consumer behaviour, earnings, unemployment, and, most importantly, whether there will be a second wave lockdown, all remain unknowable."
Following the central scenario, the company expects its net debt to reduce by approximately GBP460 million to GBP650 million, which it said is comfortably within its cash resources of GBP1.6 billion. It plans on doing this through a combination of asset sales and the suspension of dividends and share buybacks.
"In summary, the company is in a much better position than we anticipated three months ago: consumer demand has held up better than expected and our online warehouses have achieved much higher capacities than we thought possible," Next said.
"Costs have been well controlled, and we have taken steps to ensure that our balance sheet is secure."
Next shares were up 7.7% at 5,666.32 pence each on Wednesday morning in London.
By Greg Roxburgh; gregroxburgh@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
