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UK retail bellwether Next has upgraded its profit outlook for this year after better than expected sales in recent weeks.
The fashion chain, led by chief executive Lord Simon Wolfson, said it expected pre-tax profit this year to be just over £1bn, £20mn higher than its guidance in January.
The group said it was “positive” about its prospects, acknowledging it was “unusual for Next to begin the year on an optimistic note”, and was aiming for higher global sales.
But it also warned that “the risks to the wider UK economy are growing”. UK businesses face steep cost rises from April after tax changes in the October Budget.
“We expect the UK tax rises in April to weaken the UK employment market and negatively impact consumer confidence as the year progresses,” it said.
The company, which also sells other brands on its website, recorded £1bn in pre-tax profits for the first time in the 12 months to the end of January.
“To some it may seem an important milestone, even a cause of celebration,” Next said. “We do not share that view, not least because profits can go down as well as up. In fact, we think it would be a big mistake to view the company differently just because it has passed any milestone.”
Next’s full-price sales rose 5.8 per cent last year. Total group sales increased 8.2 per cent to £6.3bn.
It now expects full-price sales in the first half of the year to rise 6.5 per cent — up from the 3.5 per cent it forecast in January — with a 5 per cent increase in sales for the full year, versus 3.5 per cent previously.
Next reiterated its aim to increase overseas sales after many years of mainly focusing on its domestic market.
However, it added that “shareholders need not worry that we will open unprofitable shops, or make bad marketing investments, in the abstract pursuit of ‘global’ status”.
The company said new tariffs in the US and changes to thresholds for customs payments on deliveries to the US and EU would have “relatively little impact on the overall group’s sales or profits”.
