28th Dec 2023 11:25
(Alliance News) - Next PLC performed well in 2023 despite wider retailer concerns about unpredictable UK weather, according to AJ Bell on Thursday, ahead of the clothing, footwear and home products retailer's Christmas trading statement next week.
Last month, the FTSE 100 firm defied the uncertain mood in the retail sector and lifted annual guidance, despite tumbling consumer confidence, price inflation, and weather that swings from unseasonably warm to disappointingly cold.
Next said sales in the three months that ended October 28 grew 4.0% from a year ago, GBP23 million ahead of prior guidance of 2.0% growth. This was mainly driven by sales growth in its Online division of 6.5%.
Prior to this, Next had forecast pretax profit of GBP875 million for the financial year ending next month. Pretax profit for financial 2023 was GBP870.4 million.
Next posts a trading statement on Thursday next week for the period to December 30.
"At its core, retail is about selling the right product at the right price point in the right format for the target customer base. Doing this correctly will improve stock turn and sell through, reduce the need to discount and in turn help profit margins and cash flow. Get it wrong and the opposite will happen – excess inventory will have to be shifted to the detriment of margin." said AJ Bell analysts Russ Mould and Danni Hewson.
"Next seems to have the knack of getting this right and in this respect its key performance indicator of growth in full-price sales is particularly helpful. This will be the first figure to which analysts turn, following on from the better-than-expected 4% growth generated in the third quarter to the end of October.
"While many retailers have whinged about the British weather in 2023, the FTSE 100 firm has got on with the job and raised guidance for both sales growth and profits on no fewer than four occasions in the past nine months."
Shares in Next were down 0.1% to 8,123.51 pence each in London on Thursday morning. The stock is up 36% so far in 2023
By Greg Rosenvinge, Alliance News senior reporter
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