Next profits to be at top end of expectations

Retailer Next said its full year results would come in towards the top of expectations.

Retailer Next said its full year results would come in towards the top of expectations.

Looking to 2013, the firm expects consumer spending to remain "subdued but steady" as employment levels continue to stave off a significant downturn.

The company said although 2012 sales had been in line with forecasts, cost control measures, markdowns and gross margins had all been slightly better than expected.

As a result it narrowed full year profit guidance to the top of its previous range of £590m to £620m.

Next now expects profits to be within £7m either side of £618m, putting the new range at £611m - £625m.

This is an improvement in both numbers and tone from its third quarter update, when the firm said numbers were 'volatile' after disappointing early sales.

The fourth quarter - which ran up to Christmas Eve - went as expected, with sales growth in line with the rest of the year.

Sales at its retail arm grew by 0.8%, with its online Directory business growing by 11.2%, adding up to a total 3.9% growth across the brand.

Total stock for Next's end of season sale was down 8.2% on last year and the company said the sale had started well.

"We expect final clearance rates will be in line with last year and our internal estimates," it said in the trading statement.

"Stock levels continue to be carefully controlled and we start the new year with less stock in the business than last year."

Its outlook for the future is similarly optimistic, with Next predicting the UK would avoid any significant downturn.

"However, the continued growth in price inflation ahead of wage inflation means that real wages will continue to fall, albeit at a slower rate than last year," it warned.

"On balance, we expect the consumer environment to remain subdued but steady."

The firm is predicting total brand sales of between 1.5% and 4.0%, with underlying profit before tax up broadly in line with sales.

It anticipates that Next will generate surplus cash in the order of £250m after capital investment, tax and dividends, which it intends to return to shareholders through share buybacks.

This would equate to approximately 4% of the company's shares in issue at the current price, it said.

Recommended

Broker safety – your questions answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
How demographics affects stock valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Do you own shares in Sirius Minerals? Here’s what you need to do now
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020
Why investors should be “cautiously bullish” for 2020
Stockmarkets

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020

Most Popular

The Bank of England should create a "Bitpound" digital currency and take the world by storm
Bitcoin

The Bank of England should create a "Bitpound" digital currency and take the world by storm

The Bank of England could win the race to create a respectable digital currency if it moves quickly, says Matthew Lynn.
18 Oct 2020
Don’t miss this bus: take a bet on National Express
Trading

Don’t miss this bus: take a bet on National Express

Bus operator National Express is cheap, robust and ideally placed to ride the recovery. Matthew Partridge explains how traders can play it.
19 Oct 2020
Three stocks that can cope with Covid-19
Share tips

Three stocks that can cope with Covid-19

Professional investor Zehrid Osmani of the Martin Currie Global Portfolio Trust, picks three stocks that he thinks should be able to weather the coron…
12 Oct 2020