Next hikes profit forecast amid rise in sales

Next (LON: NXT) has revealed better than expected sales for the third quarter of the year.

The fashion retailer has hiked its profit forecast for the year to £365m – up from £300m.

Despite the pandemic, sales in the three months to 24 October were 2.8% higher than the year previously.

Year-end net debt is forecast to reduce by £487m to £625m.

Home and childrenswear at the retailer are over-performing, however, the demand for men’s and women’s formal and occasion clothing is weaker.

In Retail, out of town retail parks continue to perform better than high streets and shopping centres. Online sales at Next were strong in the quarter and increased by 23.1%.

“We have revised our guidance scenarios for the fourth quarter, which are set out below. There remains a very high degree of uncertainty in our estimates and much will depend on the progress of the pandemic, along with the Government and consumer reaction to developments,” said Next in a statement.

“Our assumptions for each scenario regarding further lockdowns, Retail footfall, capacity constraints and stock are also given in the table. We would not want to give the impression that the assumptions below and their consequences are scientific or precise; they are intended to give an indication of the sort of things that might help or hinder sales in the run up to Christmas.”

“The biggest single unknown is whether England, Scotland and Northern Ireland will follow Wales’ decision to shut non-essential retail shops. A two week lockdown in England, Scotland and Northern Ireland in November would reduce Retail full price sales by around £57m3 (depending on timing), representing 17% of Retail full price sales and 6% of the Group’s full price sales in the quarter.”

Shares in Next (LON: NXT) are trading at 6.120,00 (0851GMT).