Next increases full-year outlook as profits surge to £347m

Next also warned against stock levels due to supply chain issues

Next has raised its forecast again, as the retail outlet thinks its fill-year profit could reach its highest point since 2016, having seen its trading levels “materially exceed expectations” during H1.

The clothes seller anticipates its profit before tax for 2021 will rise to £800m, the highest point in five years.

Since its shops re-opened in April, Next says its sales have surpassed expectations, while online deals have fallen back somewhat.

“The positive sales trend has continued through August into the second half, despite significant stock shortages caused by Covid-19 disruption to international supply chains,” Next said.

Although Next did warn that ongoing supply chain issues meant that its stock levels were not optimal, which means its sales are vulnerable.

Next chief executive Lord Wolfson said the retail bounce-back from the coronavirus pandemic was “far stronger than we anticipated”. 

“Sales in retail stores have done better than planned, while online sales have fallen back less than we expected. It appears that the wider economy has not suffered the long term damage many feared, for the moment at least. And, in particular, employment has held up well,” he added.

The Next share price is up by 2.75% during the morning session on Wednesday.

“Next is a best-in-class UK retailer so if even it is struggling to navigate staffing and supply chain issues then you know its peers will be really under the pump,” says Russ Mould, investment director at AJ Bell.

“The company is also very upfront with its guidance, so you know you are getting an unfiltered version of events.”

“Trading may have been better than expected in recent months, supporting an increase in full year guidance, but the company is clear on the risks it faces heading into the key Christmas trading period,” says Mould.