28th Oct 2020 09:20
(Alliance News) - Next PLC on Wednesday upped its profit forecast, after online sales remaining strong in the third quarter, but emphasised the uncertainty posed by Covid-19 and the looming threat of another lockdown.
The clothing and home products retailer said full-price sales in the third quarter ended the past Saturday were up 2.8% year-on-year. Total sales were up 1.4%.
Next said: "The sales performance by product category remains very similar to the second quarter, with Home and Childrenswear over-performing while demand for men's and women's formal and occasion clothing remains weak. Online sales remain strong, both in the UK and overseas."
Next said its central scenario for pretax profit for the full financial year is now GBP365 million, previously expected at GBP300 million in September, though down from last year's GBP748.5 million. Its "upside" scenario is GBP400 million and "downside" GBP290 million. The forecasts are for a comparable 52-week year. This year actually will be 53 weeks, so that will add another GBP12 million to profit, Next said.
"There remains a very high degree of uncertainty in our estimates and much will depend on the progress of the pandemic, along with the government and consumer reaction to developments," the company said.
Year-end net debt is expected to be reduced to GBP625 million from GBP1.11 billion. Next said this is comfortably within the company's cash resources of GBP1.6 billion.
"The biggest single unknown is whether England, Scotland and Northern Ireland will follow Wales' decision to shut non-essential retail shops," Next added.
With regards to Brexit, Leicester, England-based Next said: "We are well prepared and have set up all the administrative, legal and physical infrastructure that will be needed to operate effectively at the end of the current transitional arrangements. This is the case whether the UK and EU reach a trade agreement or not.
"The biggest single risk of a no-deal Brexit is that our ports do not cope effectively with increased levels of administration."
Next shares were up 0.4% at 6,114.00 pence each in London on Wednesday morning.
By Greg Roxburgh; [email protected]
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