Next cautious on UK economy as annual profit jumps

Clothing retailer Next met guidance with a 11.8 per cent rise in year profit driven by growth at its Directory internet and catalogue business.

The firm, which also trades from over 500 stores in Britain and Ireland and almost 200 stores in more than 30 countries overseas, said the modest improvement in Britain's consumer economy looked set to continue.

“However, conditions are likely to remain far from buoyant and there are real risks to the sustainability of the current recovery,” it said.

Data and surveys have shown an improving outlook for UK consumer spending, which generates about two thirds of gross domestic product, but retailers have been wary as inflation continues to outpace wage rises.

Next made a profit before tax of £695.2 million in the year to end-January 2014.

That compares to Next’s own guidance of £684-700 million, analysts’ consensus forecast of £695 million and £621.6 million made in the 2012-13 year.

Sales, excluding VAT sales tax, rose 5.4 per cent to 3.74 billion pounds

Underlying earnings per share rose 23 per cent to 366 pence, boosted by share buy-backs and the dividend was increased 23 per cent to 129 pence.

The firm forecast sales growth of 4-8 per cent in its 2014-15 year, with pretax profit rising to £730-770 million.

“In the year ahead we expect the fourth quarter to provide tough comparatives and it will be hard to beat. Accordingly we are budgeting very cautiously for the final quarter,” it said. (Reuters)