By Jaime Llinares Taboada
Next PLC on Thursday raised its guidance for the fiscal year ending in January and said its profits would increase further in fiscal 2023.
The London-listed fashion retailer now expects to make a pre-tax profit of £822m ($1.11bn) for the financial year 2022, down from a previous forecast of £800m. That would be an increase from £729m in FY 2020, pre-pandemic, and £342m in FY 2021.
Next said total full-price sales, including interest income, were up 20% in the eight weeks to December 25 from levels seen two years ago. In November, the company had forecast fourth-quarter full-price sales to rise 10%.
Online sales increased by 45% during this period, while retail sales remained 5.4% below pre-pandemic levels.
For the year ending December 25, sales increased 13% from fiscal 2020 and 35% from fiscal 2021.
Next expected the fourth quarter to be weaker than the third, but sales improved significantly over the period thanks to a strong recovery in Next-branded formal and second-hand adult wear, a- he declared. Sales remained robust despite inventories significantly lower than expected, showing strong underlying consumer demand, Next said.
Cash flow generation for the year to January is expected to be at least £345m before distributions to shareholders.
Next said it would pay a special dividend of 160 pence per share in January. The company intends to return to its pre-pandemic ordinary dividend cycle next year.
Looking to financial year 2023, Next expects its pre-tax profit to rise a further 4.6%, to £860m. This assumes sales growth of 7.0%, with strong increases in the first quarter and a more stable performance over the rest of the year.
The company added that its wage inflation will be 5.4% over the coming year, due to an increase in the national living wage in the UK and labor shortages in some sectors.
Write to Jaime Llinares Taboada at [email protected]; @JaimeLlinaresT