Next ups profit guidance after strong first quarterWednesday 30 April 2014 08.50
Clothing retailer Next today raised its guidance for annual sales and profit after posting strong trading in its first quarter that reflected better weather in the run up to the late Easter holiday.
Next trades from over 500 stores in the UK and Ireland, almost 200 stores in over 40 other countries and via its Directory internet and catalogue business.
It said today it now expected a 2014-15 pretax profit of £750-790m.
That compares to previous guidance of £730-770m and would represent growth of 8-14% on the £695m made in 2013-14.
Next said its total sales rose 10.8% in the 13 weeks to April 26.
"It was a little bit ahead (of internal expectations) but last year retail had really poor weather - a big freeze in early February, a very cold and early Easter. This year Easter was late and warm," chief executive Simon Wolfson said.
Next said sales at stores rose 8.8%, while Next Directory sales were up 13.7%.
The firm raised its full-year sales growth guidance to 5.5-9.5% from 4-8% previously and its earnings per share growth guidance to 8-14% from 5-11%.
Britain's recovery from its deepest recession in decades passed a milestone earlier this month when official data showed wages growth caught up with inflation for the first time in nearly four years, while unemployment sank to a five-year low.
Data yesterday showed Britain's economy racked up its strongest annual growth in more than six years in early 2014.
Wolfson, who sits in Britain's upper house of Parliament and is a prominent supporter of the prime minister's ConservativeParty, said although there were signs the economy was improving he remained concerned about the prospect of interest rate rises and house price inflation getting out of control.
"There is evidence, particularly in the south east (of England), of a property bubble. There's no question that when interest rates go up that will moderate the recovery," he said.
Wolfson noted that Next's demographic was particularly exposed to interest rates.
"A 25 to 40-year-old customer with children is more likel yto be exposed to rising interest rates than a younger or older customer so Next is particularly vulnerable to rising interest rates," he said.
Next also said today it will pay another special dividend, its third this year, of 50 pence.
It will distribute surplus cash through more special dividends as long as its share price remains above 6,400 pence.