‘Optimistic’ Next reports recovery in sales
Next managed to turn a small profit in the first half and raised its outlook for the rest of the year after trading beat expectations post-lockdown.
The high street bellwether said its central scenario now assumed full year pre-tax profits of £300m, up from the £195m it forecast in July.
In the last seven weeks, full price sales grew 4pc on last year, driven by cool weather and fewer overseas holidays, as footfall remained relatively high at its stores in retail parks.
The company said its “sales performance through the pandemic has been more resilient than expected”.
The robust performance was driven by its online business which, even before lockdown, accounted for more than half of its turnover.
Products that sold well during the crisis included homeware, childrenswear, loungewear and sportswear. The retailer said it was a “stroke of good fortune” that these products had a low rate of returns.
It came as Next posted pre-tax profits of £9m for the six months to July, while revenue declined by a third to £1.29bn.
Chief executive Simon Wolfson said: “Standing as we are, in the midst of the pandemic, with no sign yet of abatement or vaccine, it might seem odd that the essential tone of this report is optimistic.
“The prospects for the next six months remain as uncertain as the outlook for the virus itself: never has our guidance been more tentative or as broad in its possible outcomes but in all our guidance scenarios the group generates a profit, generates cash and reduces its debts.”
Shoppers have been more reluctant to enter its city centre and high street stores, however, with footfall down by a third and 37pc respectively.
Next attributed this to “people’s reluctance to be in crowded places, particularly those that many would normally access through public transport. In addition (and again unsurprisingly), those city centres that are most dependent on office worker trade have fared much worse than the average”.
In its most upbeat scenario, Next said it could make £370m in pre-tax profits but will still make £110m in its worst case.
Shares closed 4.1pc higher at £64.26.
Read more:
