19th Sep 2024 08:37
(Alliance News) - Shares in Next PLC climbed on Thursday as the retailer raised profit guidance for the second time in two months.
The Leicester-based clothing and homewares seller raised the outlook on the back of strong sales over the past six weeks.
In the half-year ended July 27, revenue rose 14% to GBP2.86 billion from GBP2.52 billion a year earlier. Next's pretax profit improved 3.9% to GBP432.1 million from GBP415.7 million.
Full price sales rose 4.4% during the period, and growth has picked up in the first six weeks of the second half.
Full prices sales during the six-week period have "materially exceeded our expectations", rising 6.9% on-year.
Next now expects full-year full price sales growth of 4.0%, its outlook improved from 3.4%. Second half growth is seen at 3.7%, increased from 2.5%.
Online sales rose 7.0% in the first half, retail sales fell 2.1% and finance sales ticked up by 4.9%. Total Platform sales jumped 25%.
Next pointed out in 2004, retail stores accounted for 72% of total sales and 70% of profit, compared to 30% of sales and just 19% of profits now.
The UK business, as expected, only grew by 1.0%, held back by tough comparisons with last year’s
exceptionally warm second quarter.
The Next brand was down 0.9% in the UK which the firm said was potentially "worrying". But Next believes this underperformance was mainly because fashion ranges did so well during the exceptionally warm weather last year. The sharp recovery in the last six weeks, backs this analysis, Next said.
Next now predicts pretax profit of GBP995 million, which would be a year-on-year rise of 8.4%. The outlook was improved from GBP980 million. In August, Next had increased guidance by GBP20 million from GBP960 million.
"The company continues its mantra of under-promise and overdeliver, which should support further share price gains today," said Panmure Liberum analyst Anubhav Malhotra.
Shares in Next rose 3.5% to 10,688.02 pence in London on Thursday, after earlier hitting an all-time high of 11,103.83p.
Next declared a 75 pence per share ordinary dividend, up from the 66p payout it declared a year prior. It expects to make buybacks for the full-year totalling GBP306 million.
"If we achieve our profit guidance of GBP995 million, these buybacks represent an estimated rate of return of 8.7%; ahead of our buyback hurdle of 8%."
Next said the results showed the virtues of "consistency".
"People in business who make the same point repeatedly can be regarded as reassuringly consistent, or painfully dull - often both. Here, we have tried to get the balance right," the firm commented.
By Jeremy Cutler, Alliance News reporter
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