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Next Plc raised its guidance for sales and profit, with the fashion and homewares retailer citing a stronger-than-expected start to the fiscal year despite growing risks in the UK economy.
The company now expects £1.1 billion ($1.4 billion) of pretax profit this year, higher than a previous forecast of £1.05 billion, according to a statement Thursday. Next sees full-price sales this year rising 5 percent, up from its previous guidance of 3.5 percent but less than 5.8 percent growth last year.
Next’s shares surged as much as 9 percent in early trading in London. They were up 8.7 percent over the past 12 months through Wednesday’s close.
The upgrade is driven by optimism in first-half performance, even as Next warned that demand is likely to weaken as higher UK business tax rises from April hurt the employment market and weigh on consumer confidence.
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Next is considered an indicator of the health of the British high street with its network of more than 400 stores across the UK. Like rivals, the company is grappling with a higher minimum wage and tax hikes announced in Chancellor of the Exchequer Rachel Reeves’ revenue-raising October budget.
Chief executive officer Simon Wolfson has previously warned retailers are facing a damaging combination of higher costs and weak consumer sentiment.
Still, Next has delivered profit growth on the back of strong digital sales, including overseas. Last year was the first in which the company reported pretax profit above £1 billion.
On a call, Wolfson called that an “arbitrary milestone” that would not change the company’s plans. While Next expects subdued consumer sentiment, the company is not seeing any signs of wider distress, he said.
By Jennifer Creery and Katie Linsell
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Next Raises Outlook Again With Profit Set to Top £1 Billion
Next Plc has raised its profit guidance for the third time this fiscal year, now expecting over £1 billion in annual pretax profits, driven by strong sales despite declining consumer confidence ahead of tax hikes.
