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Next raises guidance after good first-half online performance

31 Jul 19

LONDON (ShareCast) - (Sharecast News) - Next reported a 4.3% improvement in total full-price sales for its first half on Wednesday, following a decent performance from its online operations in both the first and second quarters.
The FTSE 100 fast fashion retailer said full-price sales from its full-price physical retail stores were down 3.9% in the six months ended 27 July, while its online division saw full-price sales surge 11.9% in the same period.

That made for an improvement in product full-price sales of 3.8% for the first-half, with finance interest income ahead 9.9% in the period.

Next said full-price sales in the second quarter had been better than it anticipated, and was up 4.0% on last year.

That was 4.5% better than the guidance for a fall of 0.5% the company provided in its May trading statement.

It said a closer examination of the quarter's performance by month showed that full-price sales during May and June combined were up 3.0%, with July performing "particularly strongly", up 6.8% on last year.

However, it said some of July's over-performance in full-price sales came as the result of lower markdown sales in its end-of-season sale.

"We believe that the sales performance in May [and] June is a better guide to underlying growth, and we have used this number as the basis for our second half guidance," the Next board said in its statement.

The company went into its end-of-season sale on 6 July, with surplus stock down 1% on last year.

Clearance rates to date - the percentage of sale items that had been sold - were 2% lower than expected.

"As a result, we have adjusted our guidance to assume a similar reduction in sale clearance rates in the second half," Next said.

Following the better-than-anticipated sales performance in the second quarter, Next increased its full-price sales guidance for the second half from growth of 1.7% to growth of 3.0%, in line with its full price sales growth in May and June.

"The increase in our full price sales guidance is 70m and, after accounting for associated costs, is expected to add 20m to profit.

"Lower clearance rates to date, along with anticipated lower clearance rates in the second half, are forecast to cost an additional 10m.

"As a result, we are increasing our guidance for full year group profit by 10m to 725m, marginally up on last year."

Next said it now expected earnings per share to grow by 5.2%.

"We maintain our guidance to return 300m of surplus cash to shareholders, by way of share buybacks," the board added.

"To date we have purchased 280m."

Next said it was scheduled to announce its results for the first half of the year on 19 September.

Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.


Market Data

Currency UK Pounds
Price 5,988.00p
Change Today 168.00p
52 Week High 6,170.00p
52 Week Low 3,991.00p
Volume 1,110,456
Shares Issued 133.23m
Market Cap 7,978m


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