Next maintains profit guidance after navigating tough trading

Unseasonably warm weather brings poor start to autumn/winter fashion season

Next forecast full-price sales growth of 3 per cent and pretax profit of £727 million (€816.1 million) for the full-year 2018-19. Photograph: Andrew Winning/Reuters

Next forecast full-price sales growth of 3 per cent and pretax profit of £727 million (€816.1 million) for the full-year 2018-19. Photograph: Andrew Winning/Reuters

 

British clothing retailer Next on Wednesday maintained its profit guidance for the full year after it navigated the difficult autumn trading environment that has hurt its rivals.

Recent industry updates have indicated a poor start to Britain’s autumn/winter fashion season, given an unseasonably warm September and October and a tough economic backdrop, with consumers’ budgets under pressure.

Next, which raised its sales and profit guidance last month, said full-price sales including interest income rose 2.0 per cent in the 13 weeks to October 27th, having risen 2.8 per cent in the previous quarter.

The retailer, which trades from over 500 stores in Britain and Ireland, about 200 stores in 40 countries overseas and its Directory online and catalogue business, said that outcome was in line with its expectations.

Online business

Full-price sales at Next’s stores fell 8 per cent but were up 12.7 per cent at its online business, continuing well-established trends.

Superdry warned on profit earlier this month, highlighting weak sales of jackets and sweatshirts, while department store chain John Lewis has reported lacklustre trading for its second half so far.

Online fashion has been the exception, with both Asos and Boohoo recently reporting strong sales growth. Marks & Spencer, Britain’s biggest clothing retailer, will update on trading next Wednesday.

An industry survey published on Tuesday showed overall retail sales growth had slowed more than expected this month.

For the full 2018-19 year Next forecast full-price sales growth of 3 per cent and pretax profit of £727 million (€816.1 million) versus £726.1 million in 2017-18, keeping the guidance it issued in September.

Shares in Next closed down nearly 2 per cent in London at 5,204 pence, valuing the business at £7.27 billion.

– Reuters