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* First half profit up 5.9% compared to 2019
* Sales in last eight weeks up 20% versus two years ago
* Next says "things may not be as good as they appear"
* Concerned about warehouse and logistics worker shortages
* Shares hit record high
(Adds details, CEO comments)
By James Davey
LONDON, Sept 29 (Reuters) - British clothing retailer Next
raised its profit guidance for the fourth time in six months on
Wednesday as shoppers flocked back following the easing of
COVID-19 restrictions, but warned labour shortages could impact
Christmas deliveries.
Shares in Next rose as much as 4% to a record high
of 8,408 pence after it reported a 5.9% increase in first-half
profit compared to 2019, before the pandemic disrupted trading.
Sales over the last eight weeks leapt 20% on the same basis,
exceeding its expectations.
However, Next, which trades from about 500 stores and
online, warned that soon "things may not be as good as they
appear today" as the impact of pent-up demand, record savings
ratios and lower spending on overseas holidays would diminish.
"It also seems likely that increases in the cost of living,
along with the potential effect of seasonal labour shortages on
our delivery service, may moderate demand in the months ahead."
Disruption to Next's supply chain meant stock levels were
12% down on two years ago, with homeware and furniture
particularly hit. It expects stock to return to more normal
levels by December.
Next said prices were about 2% higher this season, driven by
higher shipping costs and mainly affecting larger home products.
It sees selling price inflation of around 2.5% in the first half
of its 2022-23 financial year, before easing in the second half.
CHRISTMAS CONCERNS
Next is worried about warehousing and logistics staffing for
Christmas.
"Without the contribution of overseas workers to assist with
these peaks, we suspect customer deliveries may take longer to
arrive as we go into the peak trading season," it said, calling
on the government to relax some post-Brexit immigration rules.
CEO Simon Wolfson, a vocal Brexit supporter, told Reuters
Next may have to shorten the deadline for next day delivery
orders from 11 pm to 4 pm, "or at worst maybe move to a two day
delivery."
"I don't think we'll get to the point where we say 'we can't
take any more orders'. That will not happen," he said. "But it
may be that the service levels we provide in that peak period
won't be as sharp as the ones that we provide through the rest
of the year."
Next made a pretax profit of 347 million pounds ($474
million) in the six months to July, on full-price sales up 8.8%
versus 2019.
It raised its full-price sales guidance for the rest of the
2021-22 year to a rise of 10%, versus up 6% previously, and its
forecast for pretax profit to 800 million pounds, 36 million
pounds ahead of its previous guidance.
Next has proved resilient during the pandemic, benefiting
from its long-established online operations.
Rivals with weaker or no online business, notably Primark
, saw large falls in sales. Others, such as Topshop-owner
Arcadia, and Debenhams have gone bust.
($1 = 0.7311 pounds)
(Reporting by James Davey Editing by Edmund Blair and Mark
Potter)
