Next to repay business rates relief after sales surge

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Fashion giant Next has increased its profit guidance for the financial year, with sales and profits “materially ahead” of expectations following a strong trading performance.

In a trading statement for the 11 weeks to July 17, Next reported that full-price sales were up 18.6% on pre-pandemic levels. It used a two-year comparison “as comparisons with last year are not meaningful”.

As a result of surging sales for the period, Next updated its profit guidance for the financial year by £30m to £750m, a 3% profit-before-tax increase on the 2019/20 financial year.

Third-party brand full-price sales were up 66% for the period with sales of homewares up 27% and childrenswear up 6%. The retailer’s international online business continued to perform strongly with sales up 66%.

Next said that it would repay £29m of business rates relief back to the government. The decision was made by its board due to stores performing “better than we expected” since they were allowed to reopen in April.

The retailer said it expects to generate £483m in surplus cash this financial year, £172m of which will be put back into the business to reverse last year’s declines, £71m will be invested with the remaining £240m set to be issued to shareholders.