Next Plc raised its profit forecast for the fifth time since June and said it will grow even more next year after the British home and clothing retailer thrived during the Christmas shopping season.
The company expects full-year pretax profit of £905 million ($1.1 billion), up from a previous forecast of £885 million, according to a statement Thursday. Next year the business forecast profits to grow to £960 million.
Next is the first major retailer to report on how inflation and weak consumer confidence affected sales in the run-up to Christmas. Its strong performance may indicate that the holiday shopping season has been kinder to retailers than many expected.
Next stock rose 4 percent in early London trading.
The retailer is often considered a bellwether given it has hundreds of stores and a successful website and its full-price sales rose 5.7 percent year-on-year in the nine weeks through Dec. 30, beating previous guidance of 2 percent.
Next also said that consumer environment looks “more benign than it has for a number of years,” as inflation eases. The company forecast zero inflation in its selling prices in the next fiscal year as factory gate prices are falling. This is good news for consumers after retailers were forced to raise prices due to higher input costs.
However, Next is also one of the UK’s strongest retailers and tends to outperform most of its rivals, meaning it might be an outlier during a cost-of-living crisis that has eroded many household budgets and affected shopper spending.
British sneaker retailer JD Sports Fashion Plc warned on Thursday that its performance over the peak Christmas period was slightly behind expectations and profit would be weaker as a result of a “softer and more promotional” than anticipated market.
Next has been on an acquisitive streak in recent years, buying brands including FatFace, Joules, Cath Kidston and Made.com. The company has also strengthened its control over UK fashion house Reiss.
By Katie Linsell
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Next Raises Guidance Again on Strong Third Quarter Sales
The retailer boosted its full-year forecast for profit before tax by £10 million ($12 million) to £885 million, in an earnings update.
