Next led gains on FTSE 100 on Thursday, as it once again beat market expectations and trumped rivals amid a challenging period for UK retailers.
Lord Simon Wolfson, the firm’s chief executive, said it had been “a long time since” since the business started the financial year with such a positive frame of mind.
This comes as FTSE 100 is having one of its best days in the last year, reaching an 11-month high of 7,874.94 by just after 2pm, up more than 1.7 per cent.
It soared after the Bank of England decided to hold interest rates at 5.25 per cent again, but its monetary policy committee appeared to be more dovish in its outlook, which spurred optimism about rate cuts.
“The group has delivered its highest ever levels of revenue and profit,” he said, adding he felt Next was “entering a new era”.
Profits grew five per cent to a better than expected £918m, while group sales rose 5.9 per cent to £5.8bn
Wolfson now expects profit guidance to reach £960m this year, up four per cent from what was previously expected.
Next also said hard-pressed shoppers could expect a “small reduction” in selling prices in the year ahead, despite the business facing a £60m hit from rising wage bills.
The business which has a market cap of over £10bn, continues to excel in an extremely challenging market for retailers.
A number of brands are drowning in a sea of rising costs and slowing sales.
Ted Baker has just filed for administration, placing hundreds of jobs at risk and the lifespan of Superdry continues to hang in the balance.
Wolfson has spent the last four years transforming Next’s reputation from frumpy high street stores into one of the strongest players in both the digital and physical retail space.
Lord Wolfson
It has built immunity from the crisis on UK high streets by snapping up ailing retailers.
In the last three years, the company has acquired Made.com, Joules, JoJo Maman Bebe and Cath Kidston to name a few.
It has also built a 72 per cent stake in retailer Reiss and formed a joint venture with American lingerie group Victoria Secret.
Next is also looking to have a greater focus on warehouses to help drive its online business.
It recently opened a £90m logistics hub in Elmsall, which it said would increase its online capacity by 50 per cent. Overseas the firm also opened a warehouse in the UAE.
Analysts have responded positively to the company’s update.
This morning, analysts at Panmure Gordon and Peel Hunt both rated the firm a ‘Buy’.
Guy Lawson-Johns, equity analyst, Hargreaves Lansdown, said: “Next materially outperformed expectations, beating their upgraded pre-tax profit guidance of £915mn. Unusually cold and wet weather dampened spirits at the start of 2023, but May and June heatwaves powered the retailer to a 5.9 per cent rise in underlying revenue.
“But Online revenues are the key driver for growth. Revenues from this channel are up around 47 per cent compared to 2020 and unlike many other peers, the covid uplift has stuck.”
He added: “ It’s no secret Next has worked hard on online service improvements and it’s paying dividends. Better stock availability and excellent operational execution are helping to deliver ahead of expectations.
“Importantly this online growth has been achieved whilst maintaining full-price sales. Unlike peers such as JD Sports, who have had to lean on more promotions to entice punters to part with their cash, Next have stood firm on its pricing.”