Next PLC Raises Fiscal 2022 Guidance, Records Further Profit Growth in Fiscal 2023 – Update

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