LONDON (Alliance News) - FTSE 100-listed fashion retailer Next PLC on Tuesday said its full-price brand sales rose in the first half of its financial year and said it has upgraded its full-year pretax profit expectations after its sales came in ahead of guidance.
Next said its total sales in the 26 weeks to July 25 were up 3.5%, with 0.8% growth in retail sales and 7.5% growth in directory sales in the period. The sales were marginally ahead of the guidance of 0% to 3% growth that Next issued in March.
As a result of the beat to its sales growth guidance, Next said it has upgraded its pretax profit forecast for the year to between GBP805 million and GBP845 million from between GBP785 million and GBP835 million, while it increased its full-year sales guidance growth range to between 3.5% and 6% from between 1.5% and 5.5%.
In April, Next reported full-price sales growth of 3.2% in the first quarter of 2015 which was ahead of its 0% to 3% guidance for the first half as a whole. However, it said at the time that it maintained its original profit and sales guidance for the full year.
Its 1.5% to 5.5% sales growth guidance had also been cut in March from growth of between 2.5% and 7.5% which it predicted in December as it said international sales would be hit due to the issues in Russia and Ukraine while some of its product lines faced tough comparatives.
The fashion retailer, which last year overtook big rival Marks and Spencer Group PLC to become the UK's most profitable clothing retailer, has historically set guidance at the start of each year that it then goes on to beat and raise.
Analysts at Investec said that Next's good results will help it to outperform its peers and lead to a better gross margin.
"Next's full-price trading stance means it was more than able to offset a weak May, and we believe this will once again result in a better gross margin out-turn relative to clothing peers," said Investec analyst Alistair Davies.
Next added that as its share price has remained above its buyback price limit of GBP68.27 during the first half of the year, it has not used surplus cash to retire any shares in the period. It therefore intends to pay a special dividend of 60 pence per share, and has increased its upper limit for share buybacks to GBP69.62 due to the raising of its profit guidance.
Shares in Next were trading up 2.2% at 7,665.00 pence Tuesday afternoon.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance and Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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Next (NXT)
