(An article published at 0754 BST incorrectly stated the company's guidance for earnings per share and pretax profit percentage growth figures. The correct version follows.)
LONDON (Alliance News) - UK clothing and homeware retailer Next PLC raised its profit and sales forecast for the current financial year for a second time Tuesday, after reporting strong growth in the first half of the year driven by all parts of the business.
Next total brand sales were up 11% in the second quarter and for the first half of the year to July 26, driven by a combination of improving sales from its stores, new retail space, strong growth online and a flourishing international business. In the first half, 2.4% of sales growth was the contribution from new retail space.
"Sales are currently ahead of the 5.5% to 9.5% full-year growth guidance we gave in April. We are therefore raising and narrowing our sales guidance range for the year to 7% to 10%," the company said in a statement Tuesday.
The retailer also raised its pretax profit guidance for the year ending in January 2015 by GBP25 million, and said it now expects to deliver a profit in the region of GBP775 million and GBP815 million, growth of between 11% and 17%.
It also raised its guidance for earnings per share, as it now targets growth of between 12% and 18%, up from the 8% to 14% guidance it gave in April.
For the last two quarters, Next has seen very strong brand sales growth driven by both in-store and online sales, while it has also posted its third consecutive quarter of positive like-for-like growth within its retail business.
The retailer had already raised its profit and sales guidance forecasts for the current financial year once this year, after reporting strong sales growth in the first quarter from both its retail stores and online business.
Retail sales from Next stores were up 7.5% in the first half of the year, while Next Directory sales rose 16%, boosted by a particularly strong second quarter.
Like other rivals, Next continues to be powered forward by a familiar set of drivers - the addition of net retail space, an increase in costs savings offsetting cost inflation, and most importantly an increased profit from online operations, which in Next's case is its online and catalogue business called Next Directory.
The retailer has seen retail sales from its stores pick up as life on the UK high street continues to improve, while its Next Directory business is reaping the benefits from further service improvements, the launch of The Label as a standalone website, and a flourishing international business.
Next has continued to pump investment into its online business by improving UK delivery services, expanding its online product offer, and investing in overseas markets such as China and Hong Kong.
Next gave a wide sales guidance for total brand sales in the second half of the year.
"Our guidance for the next six months is for growth of between 4% and 10%," the retailer said in its statement Tuesday.
Next said earlier in the year that it would generate around GBP325 million of surplus cash which it would return to shareholders through special dividends and or share buybacks.
The company has already paid three special dividends for a total of GBP223 million, and also returned a further GBP105 million through share buybacks, totalling GBP328 million so far this year.
"We do not anticipate paying any further special dividends in the current year. Although, if our share price falls below our buyback limit price, we will continue to return further surplus cash through share buybacks," the company said.
Next said it will release its interim results on September 11.
Last month, Next Product Director Christos Angelides stepped down to take up a job with US clothing retailer Abercrombie & Fitch Co. The news came just a month after the retailer announced that Finance Director David Keens will be retiring next March.
Next shares were amongst the biggest FTSE 100 gainers Tuesday morning, up 2.6% at 6,690.00 pence.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
Copyright 2014 Alliance News Limited. All Rights Reserved.
Next (NXT)
