Next profits to be at top end of expectations

Retailer Next said its full year results would come in towards the top of expectations.Looking to 2013, the firm expects consumer spending to remain "subdued but steady" as employment levels continue to stave off a significant downturn.The company said although 2012 sales had been in line with forecasts, cost control measures, markdowns and gross margins had all been slightly better than expected. As a result it narrowed full year profit guidance to the top of its previous range of £590m to £620m.Next now expects profits to be within £7m either side of £618m, putting the new range at £611m - £625m.This is an improvement in both numbers and tone from its third quarter update, when the firm said numbers were 'volatile' after disappointing early sales.The fourth quarter - which ran up to Christmas Eve - went as expected, with sales growth in line with the rest of the year.Sales at its retail arm grew by 0.8%, with its online Directory business growing by 11.2%, adding up to a total 3.9% growth across the brand.Total stock for Next's end of season sale was down 8.2% on last year and the company said the sale had started well. "We expect final clearance rates will be in line with last year and our internal estimates," it said in the trading statement. "Stock levels continue to be carefully controlled and we start the new year with less stock in the business than last year."Its outlook for the future is similarly optimistic, with Next predicting the UK would avoid any significant downturn."However, the continued growth in price inflation ahead of wage inflation means that real wages will continue to fall, albeit at a slower rate than last year," it warned."On balance, we expect the consumer environment to remain subdued but steady."The firm is predicting total brand sales of between 1.5% and 4.0%, with underlying profit before tax up broadly in line with sales.It anticipates that Next will generate surplus cash in the order of £250m after capital investment, tax and dividends, which it intends to return to shareholders through share buybacks.This would equate to approximately 4% of the company's shares in issue at the current price, it said.