Britain's Next raises profit forecast for second time in two months

Next had expected 10% decline

  
A Next store is pictured on Oxford Street as the spread of coronavirus disease (COVID-19) continues in London, Britain, April 15, 2020.

A Next store is pictured on Oxford Street as the spread of coronavirus disease (COVID-19) continues in London, Britain, April 15, 2020.

REUTERS/John Sibley

LONDON - British fashion retailer Next raised its full-year profit guidance for the second time in two months as it reported better than expected first quarter trading.

The group, which trades from about 500 stores as well as online, said on Thursday its central guidance for pretax profit in the 2021-2022 fiscal year was now 720 million pounds ($1 billion), up from the 700 million pounds forecast in April.

That was after full price sales in the 13 weeks to May 1 fell 1.5% compared with the same period two years ago - before the COVID-19 pandemic started to disrupt trading last year.

Next's previous guidance assumed first quarter sales would tumble 10% from the same period in fiscal 2019-20. It said it had beaten this forecast by 75 million pounds.

However, the group did not raise its sales guidance for the rest of the year, which it kept at up 3% versus two years ago.

Next has shown resilience during the pandemic, benefiting from its long-established online operations.

Rivals with weaker or no online business, notably Primark ABF.L , have seen far larger falls in sales. Others, such as Topshop-owner Arcadia, and Debenhams have gone out of business.

Next said first quarter retail sales from its stores were down 76% on two years ago, reflecting COVID-19 lockdowns, while online sales increased 65%.

Total full price sales in the last three weeks were up 19%, reflecting the recent easing of pandemic restrictions.

"Evidence from last year suggests that this post lockdown surge will be short lived, and we expect sales to settle back down to our guidance levels within the next few weeks," it said.

Shares in Next, up 77% over the last year, closed on Wednesday at 8,126 pence, valuing the business at 10.8 billion pounds.

($1 = 0.7191 pounds)

(Reporting by James Davey. Editing by Sarah Young and Mark Potter) ((james.davey@thomsonreuters.com))

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