Next has reported significant increases in both full-price sales and profit before tax compared with 2019 levels and has upgraded its full-year profit guidance.
In the six months to July 2021, Next reported an 8.8% jump in full-price sales compared to pre-pandemic levels, while profit before tax was £347m, up 5.9% on 2019.
The fashion giant also noted that in the eight weeks to the end of the period, full-price sales soared 20% “materially exceeding our expectations” for trading in the second half of the year.
As a result, Next has upgraded both its full-year profit and full-price sales guidance for the full year significantly.
The retailer now predicts full-price sales to be up 10% compared with pre-pandemic levels, and is forecasting profit before tax of £800m – up 6.9% on pre-pandemic levels, and £36m ahead of previous guidance.
While Next’s ecommerce business more than picked up the slack of store closures during lockdown, the retailer said it was surprised by how well its stores picked up when restrictions were lifted.
“Sales in retail stores have done better than planned,” the retailer noted. “While online sales have fallen back less than we expected. It appears the wider economy has not suffered the long-term damage many feared, for the time being at least.”
The retailer also said its long-term prospects for growth were good, citing lower cost drag from its store network and a booming online business – including Label, its burgeoning third-party marketplace.
However, the retailer did flag uncertainties moving ahead, including whether so-called “lockdown customers”, those who only buy online, are here to stay.
The retailer also noted the ongoing supply chain crisis had impacted its stock levels, which are down 12% compared with 2019. It also said that inflation was currently running at about 2%.
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