Fashion stalwart Next to avoid high street bloodbath with solid profit haul

Fashion retailer Next will prove there is still life on the high street this week when it reports solid annual profits and reduced debts.

The retail stalwart has surprised many by consistently raising its profit forecasts for the year, despite the bloodbath elsewhere in the sector, though the demise of rivals such as Arcadia and Debenhams could play in its favour.

Next expects pro-rata 52-week annual profits of £370 million for the year to the end of January, against the £365m previously pencilled in and will this week reveal if it has delivered on that guidance. Profits on a 53-week basis will be hit by a property provision but are expected to come in at £342m.

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The full-year results and commentary will be scrutinised for chief executive Lord Simon Wolfson’s guidance for the new financial year.

Next has been one of the most successful names on the high street for decades now. Picture: Next plcNext has been one of the most successful names on the high street for decades now. Picture: Next plc
Next has been one of the most successful names on the high street for decades now. Picture: Next plc

Russ Mould investment director at AJ Bell, said: “From a strategic perspective, analysts and investors will look for an update of Lord Wolfson’s views on the value (financially and in terms of the company’s competitive position) of its physical shop estate.

“They will also look for comment on how the growing number of third-party brands, from Adidas to Neal’s Yard to The White Company, is helping sales and also Next’s acquisition plans, following the purchase of stakes in Victoria’s Secret UK and Reiss, as well as its unsuccessful offer for certain assets of the fallen Arcadia Group.”

He added: “The final point of interest, in terms of the numbers, will be the dividend. Next announced back in April that it would not pay an interim dividend and would be unlikely to announce a final payment next January either.

“However, 28 FTSE 100 firms that cancelled dividends have since recommenced them and some analysts may be tempted to ask whether Next might do the same at some stage. Intriguingly, the current analysts’ consensus forecast is for a full-year payment of 33p a share.”

Next was one of the first major retailers to embrace remote selling in a big way, initially through its successful Directory business, and latterly with a popular online offering which has utilised click and collect at the door during lockdown.

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