Next posted a better-than-expected jump in full-year profit on Wednesday as it said selling price inflation was set to be more benign than previously thought, but it continues to expect a decline in profit for this year.
In the year to January 2023, pre-tax profit rose 5.7% to £870.4m, coming in ahead of company guidance of £860m. Total trading sales were up 8.4% to £5.1bn, with full prices sales ahead 6.9%.
Retail sales rose 30% during the year to £1.9bn, while online sales nudged 2% lower to £3bn. Finance sales were 10% higher on the year at £274.4m.
The company said full price sales in January were flat and in line with its guidance. However, the participation of higher margin retail sales was greater than expected, adding £5m to profit.
Next reiterated its guidance for the current financial year, for sales to be down 1.5% on the year and for pre-tax profit to fall to £795m.
The retailer also said that selling price inflation is forecast to be more benign than previously thought. Like-for-like price inflation in Spring/Summer is expected to be 7% and 3% for Autumn/Winter, down from previous guidance of 8% and 6% respectively.
“In January’s trading Statement we set out guidance for the expected increase in our selling prices for the year ahead,” it said. “We now believe price rises in the second half will be materially lower than we initially feared.”
Next said two factors had served to reduce pressure on pricing. The first is a significant reduction in the costs of container freight as shipping capacities return to normal. The second is improving factory gate prices, resulting from the increased availability of factory capacity.
