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Next says profits will be better than expected

FASHION retailer Next, which has around 40 stores in Scotland, has told investors that its profits will be higher than expected after strong pre-Christmas sales.

The UK's second largest clothing retailer anticipates pre-tax profit of £684 million to £700m for the 12 months to the end of January, as much as 12.6% up on last year. It previously guided to a £650m to £680m profit range.

Next also said it would pay out £75m as a special dividend of 50p a share.

Its shares closed up 555p or 10% at an all-time high of 5530p.

Amrit Singh Panesar, senior trader at Accendo Markets, said: "A robust trading statement from the company has outshone sector peers Debenhams and Mark & Spencer, who have struggled in the run up to Christmas."

Sales at Next, which has 500 stores in the UK and Ireland, were up 5% for the year to December, 1.25 percentage points ahead of the top end of guidance issued in October.

Between November 1 and Christmas Eve, sales through its online and catalogue arm Next Directory sales soared 21%. Sales at its stores were up 7.7%. Next attributed its performance to strong seasonal knitwear, nightwear and gift offers.

The outcome was in contrast to department store chain Debenhams, which issued a profit warning on Tuesday. Britain's biggest clothing retailer Marks & Spencer prompted fears about its trading by launching pre-Christmas price cuts.

John Lewis and House of Fraser have posted strong festive results.

Next, whose chief executive is Tory peer Lord Wolfson of Aspley Guise, warned that despite the improving economy "the problem of little or no growth in real earnings looks set to persist".

The company believes overall consumer spending will not increase in 2014.

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