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Next cautious on new year as annual profits rise

Next seeing sales growth both in its shops and internet business
Next seeing sales growth both in its shops and internet business

Clothing retailer Next met guidance with a 12.5% rise in annual profit, boosted by sales growth at both its stores and Directory internet business.

However, the company took a cautious view of the outlook for the 2015-16 year.

The firm, which trades from over 500 stores in Britain and Ireland and almost 200 stores in other countries, said that although Britain's consumer economy looked benign, it remained very cautious in its sales budgets. 

"Whilst we are happy with most of our current product ranges, we recognise that some collections are not as strong as they were at this point last year," the firm said. 

Next said that during the spring and summer seasons it also faces very tough comparative numbers from last year, when sales were assisted by unusually warm weather. 

It noted there is potential upside in the second half as the comparative performance last year weakens, particularly in the third quarter. 

The firm has forecast sales growth of 1.5-5.5% in 2015-16 with the first half expected to be up 0-3%, and the second half up 3.5-7.5%. 

It forecast a pretax profit of £785-835m for the current year, which represents growth of 0.4-6.7%. 

Next said today that it made an underlying profit before tax of £782m in the year to the end of January 2015. That compares to its own guidance of £765-785m and £695m made in the 2013-14 year. 

Underlying earnings per share (EPS) rose 15% to 420 pence and the ordinary dividend was increased by 16% to 150 pence a share. 

Next has outperformed rivals for a decade due to a strong online offer, new store openings and diversification into new product areas, such as homewares..