Next expects full-year profits to come in at the top end of its previously guided range following a “better than anticipated” increase in sales during its third quarter.
The fashion giant said pre-tax profit for its current fiscal year was now forecast at £365m – just shy of the £370m “upside” scenario Next mapped out at its interim results last month and £65m higher than its central guidance.
It comes after Next registered a 2.8% uplift in full-price sales in the three months to October 24. Total sales during the same period were up 1.4%.
Next’s growth during the quarter was again driven by online – full-price sales made through its ecommerce channel jumped 23%. That compared with a 18% drop in full-price sales made through its physical stores.
Sales made on promotion dropped 12% compared with the same period last year. Next blamed the decline on lower footfall to its shops and capacity restraints in its warehouses, which have prioritised full-price sales over clearance.
Despite its bullish profit expectations, Next warned that “there remains a very high degree of uncertainty in our estimates and much will depend on the progress of the pandemic, along with the government and consumer reaction to developments”.
It cautioned that full-price sales could fall 8% in its fourth quarter if further local lockdowns were implemented. A national two-week lockdown resulting in the closure of non-essential retail, similar to that being undertaken in Wales, could spark a 20% drop in sales during the last three months of its fiscal year.
Next said “the biggest single unknown” was whether England, Scotland and Northern Ireland would follow Wales’ lead by implementing such a lockdown and shutting non-essential stores.
It has forecast that a similar two-week closure would wipe around £57m off its full-price store sales, representing around 6% of the group’s expected revenues during the Golden Quarter.
Next will provide its Christmas trading update on January 5, 2021.
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