21st Mar 2019 07:41
LONDON (Alliance News) - Next PLC on Thursday reported a well-flagged decline in annual profit and held its expectations for the current year amid a tough retail environment.
For the year ended January 26, the FTSE 100-listed fashion and homewares retailer posted a pretax profit of GBP722.9 million, down 0.4% from GBP726.1 million the year before, but in line with the company's expectations of GBP723 million.
Revenue rose to GBP4.17 billion from GBP4.09 billion a year ago. Full-price sales were up 3.1%, broadly in line with Next's guidance of a 3.2% increase, while total sales including markdowns rose 2.6%. In the previous financial year, full-price sales had declined 0.5% year-on-year.
The revenue increase was on the back of a solid online performance which saw sales up 15% year-on-year to GBP1.92 billion, offsetting a 7.9% slump in retail sales to GBP1.96 billion.
"Even though the High Street looks set to remain challenging our online business continues to increase its contribution to sales and profit of the group," Chair Michael Roney said.
Next is now focused on becoming increasingly reliant on its online operations in order to offset a continuing decline in retail sales.
"We cannot decide how our customers will shop; our job is to adapt and serve them in whatever way they most want," the company said.
The fashion retailer rewarded its shareholders with a 4.4% increase to its total dividend, up to 165.0 pence from 158.0p a year ago. This was after issuing a final payout of 110p.
Looking ahead, Next said it expects sales for the year ending January 2020 to increase by 1.7%, a significant slowdown from this year's 3.1% rise.
Retail sales are expected to drop by a steep 8.5%, while online will rise 11%, slower than the growth achieved in the recently-ended financial year.
Despite the guided rise in sales, pretax profit is expected to drop 1.1% to GBP715 million, due to costs associated with moving the business to online from retail.
"In the short term, many of our retail costs, such as rent, remain fixed but increasing business online generates additional variable costs required to handle more deliveries and warehouse work," Next explained.
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