Next ups profits again as shops bounce back

Next issued its third profit upgrade in less than a year, meaning it has recovered nearly all the ground lost to the pandemic.

The high street and internet retailer now thinks profits for the full year will be £720 million, another £20 million up on previous guidance.

That follows two upgrades last year – and one downgrade when the always cautious CEO Simon Wolfson sought to downbeat talk of a recovery.

Lord Wolfson has built a strong reputation for under promising and over delivering in 20 years of running perhaps the most successful retailer in the UK.

Full price sales in the 13 weeks to May were down 1.5%. That is way better than the 10% previously assumed.

Next says Homeware sales are largely to thank for the recovered ground. Sales of adult clothes lost in stores are unlikely to be recovered.

But with workers now heading back to offices, Next sales in the next few weeks could be strong.

Wolfson said: “It is more than just the office, people will be going out to restaurants, parties and weddings. A lot of people have not bought new formal wear in a year.”

Inflation, a hot topic, isn’t an issue yet for Next. “We are not seeing any significant inflation yet. There is some in cotton, but the pound has got stronger to offset commodity prices increases,” said Wolfson, who was paid £3.4 million last year, the recent annual report showed.

Next shares have almost doubled from a year ago, today rising 240p to 8366p.

The statement to the City again tried to downplay the near future.

It said: “Evidence from last year suggests that this post lockdown surge will be shortlived, and we expect sales to settle back down to our guidance levels within the next few weeks,” it said.

Richard Lim, who runs the consultancy Retail Economics, said: “These are terrific results against an incredibly tough backdrop for the retail sector. Despite mass store closures, the business pivoted its proposition towards home furnishings, its overseas presence and third-party labels, while maximising its online advantage.”