By Scott Wright
HIGH street stalwart Next provided much-needed cheer to the UK’s battered retail scene by raising its profit forecast for the year, while signalling it can take a no-deal Brexit in its stride.
Next reported a better than expected 2.8 per cent rise in full price sales for the third quarter, with total sales (including markdowns) up 1.4%.
The retailer, hailed by analysts for the resilience and adaptability it has displayed throughout the pandemic, now expects to deliver a full year profit before tax of £365 million, £65m higher than the central scenario it provided in September. And it has forecast that net debt will down by £487m to £625m.
However, Next acknowledged that the “biggest single unknown” is whether non-essential shops will be closed in Scotland, England and Northern Ireland, as they currently are in Wales, to suppress rising rates of coronavirus. The company forecasts a two-week lockdown in Scotland, England and Northern Ireland would reduce full-price sales in retail stores by around £57m, depending on timing, which it said represents 17% of full-price retail sales and 6% of the group’s full-price sales in the fourth quarter.
In the third quarter, full-price online sales surged by 23.1%, while retail sales fell by 17.9%.
On Brexit, Next said a no-deal scenario is not its preferred outcome.
“However in the event the UK does leave without a deal, we remain confident that our own systems are well prepared for no-deal,” the company said.
“So, as long as our ports continue to operate effectively, we do not believe that a no-deal Brexit poses a material threat to the ongoing operations or profitability of the group.”
Arlene Ewing at Brewin Dolphin said: “Next continues to prove its resilience and adaptability through the Covid-19 pandemic.
“The key questions remain how Covid-19 and Brexit will affect Christmas trading. Next appears to be relatively sanguine on the latter.”
Shares closed up 44p at 6,134p.
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