Next Shares Jump On FY Pre-Tax Profit Guidance Increase

Next plc's (LON: NXT) share price rallied significantly on Thursday, rising over 8% following its second-quarter trading statement.

The retailer announced an upward revision in profit guidance for the full year. The company's second-quarter performance surpassed expectations, with full-price sales up 3.2% compared to last year, beating forecasts by £42 million.

In the first half of the fiscal year, full-price sales rose by 4.4%, exceeding the initial guidance of 2.5%. Total Group sales, encompassing markdowns, subsidiaries, and investments, climbed by 8% in H1, showcasing robust performance across various divisions.

Next has increased its group profit before tax guidance for the full year by £20 million, projecting a total of £980 million, a 6.7% rise from the previous year. This profit boost is attributed to additional sales of £11 million and cost savings of £9 million, primarily in logistics.

The company's international sales played a crucial role in this success, with overseas online sales soaring by 21.9% in Q2. Domestically, UK full-price sales (both online and retail) slightly exceeded expectations, up 0.4%.
Next's strategic acquisitions have also contributed to its growth.

The company acquired a 97% stake in FatFace in October 2023 and increased its equity share in Reiss from 51% to 72% in September 2023. These acquisitions have bolstered Group sales, projected to rise by 6% for the full year, reaching £6.2 billion.

Despite the impressive first-half results, Next maintains a cautious outlook for the second half, predicting a 2.5% increase in full-price sales.

Next explained: “This might seem cautious when compared with the performance in the first half, which was up +4.4%.  However, when compared to two years ago, growth in the first half and the forecast for the second half are almost identical.”

The company's interim results are slated for release on September 19, 2024.