Next lifts FY guidance for fourth time as interim profits soar

(Sharecast News) - UK fashion retailer Next lifted full-year guidance for the fourth time this year after a better-than-expected rise in interim profits as customers flocked to its stores once they reopened from Covid pandemic lockdowns.
The company on Wednesday forecast pre-tax profit of £800m, up 6.9% from 2019 and £36m ahead of previous guidance of £764m. Full price sales for the rest of the year were expected to be 10% higher from 2019. However, it also warned over rising prices and staff shortages in the run-up to Christmas.

Profit for the six months to July 31 on a two-year basis rose 5.9% to £346.7m driven by a 7.6% increase in group sales to £2.2bn.

Supply chain problems and higher freight costs had pushed up prices by about 2% in the first half and Next cautioned this would continue into next year, with prices set to rise by about 2.5% in the first half of 2022.

It added that some areas of the business were coming under pressure from staff shortages, particularly in logistics and warehousing, which may affect its delivery service going into the peak Christmas selling period.

"The cost of living, along with the potential effect of seasonal labour shortages on our delivery service, may moderate demand in the months ahead," it said.

Overall, the company said the retail bounce-back was "far stronger than we anticipated" when stores reopened in April, while online sales fell less expected.

"It appears that the wider economy has not suffered the long term damage many feared, for the moment at least. And, in particular, employment has held up well."

"The positive sales trend has continued through August into the second half, despite significant stock shortages caused by Covid disruption to international supply chains. As a result (and not without some embarrassment) we are upgrading our guidance for the fourth time this year."