21st Mar 2024 14:53
(Alliance News) - Next PLC on Thursday struck an optimistic tone, as the company "continues to deliver against a tough retail backdrop".
Statutory pretax profit in the 52 weeks to January 27 rose 17% to GBP1.02 billion from GBP869.3 million the year prior. Next said this included a GBP109 million exceptional gain from the Reiss acquisition, bought last September.
Excluding this, and brand amortisation, pretax profit climbed 5% to GBP918 million from GBP875 million last year, GBP3 million ahead of previous guidance.
Next said total group sales climbed 5.9% to GBP5.84 billion from GBP5.52 billion with Next full price sales up 4.0%.
Online sales rose 5.0% to GBP3.16 billion from GBP3.01 billion, retail sales were flat at GBP1.87 billion, while finance income improved by 7% to GBP293 million from GBP274 million.
Statutory revenue grew 9.1% to GBP5.49 billion from GBP5.03 billion, while the cost of sales increased 7.1% to GBP3.03 billion from GBP2.83 billion.
Chief Executive Simon Wolfson said: "Last year was much better than we anticipated at this time last year, and the group has delivered its highest ever levels of revenue and profit."
"Perhaps more encouragingly, we enter the financial year with new avenues of growth along with a cost base that feels under control."
Next said its outlook for the current financial year has changed "little" since its January trading statement.
Next predicts underlying full price sales growth of 2.5% and total group sales, including subsidiaries, of 6.0%.
Pretax profit is expected to grow by 4.6% to GBP960 million.
RBC Brewin Dolphin analyst John Moore commented: "Next continues to deliver against a tough retail backdrop, with growing momentum on sales and cashflow management. The group's strong balance sheet means Next is a beneficiary as other brands struggle in the current environment, and we have seen that play out in recent years with its acquisition of a range of well-known peers."
AJ Bell analyst Russ Mould noted Next's record of "under-promising and over-delivering". The company upped its outlook five times over the course of the financial year just ended.
"It is striking therefore to see Wolfson be so openly positive about the prospects for the year ahead. The company is sticking to its guidance for the year to January 2025 as cost pressures ease, to the extent Next believes it may be able to reduce prices in store, and the clouds begin to part for consumers," Mould added. "Not all retail businesses are created equal and the excellent way Next as a business has been positioned helps underpin and lend credibility to its optimistic outlook."
One thing that sets Next apart, is its ability to do the "basics of retail right", the AJ Bell analyst added.
"The company has worked hard to develop its technology and warehouse infrastructure so it is able to handle the challenges of modern retail and has even been able to absorb the impact of shipping disruption without any drama. It offers next-day delivery options online and its physical stores provide a useful support role as a hub for web-based sales. It is so good at these fundamentals it now offers its services to third parties through its Total Platform. This, plus prudent steps to expand the brand and operation overseas, offer other growth levers which Next can pull," Mould added.
Next shares were 5.8% higher at 9,004.00 pence each in London on Thursday afternoon.
By Eric Cunha, Alliance News news editor
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