Next grew its online customer base by 40% to 8.4m last year
Next (LON:NXT) navigated the coronavirus pandemic by growing the scope of its online business which accounted for nearly 50% of the company’s revenue.
The fashion retailer confirmed that its online sales have exceed estimates during the first eight weeks of the year, up 60% compared to two years ago. Subsequently the FTSE 100 company is raising its profit guidance by £30m to £700m.
Next also said it grew its online customer base by 40% to 8.4m last year, thanks to online sales which amounted to nearly 50% of the company’s turnover.
Pre-tax profit was recorder at £342m, matching a trading update by the company in January, while brand full price sales for the year fell by 15% and total sales were down by 17% from the year before.
Despite shops remaining closed for most of the year Next cut its net debt by £502m to £610m. In addition, the company said it will further reduce its net debt to £435m by generating £175m of surplus cash.
Next said it would not pay a final dividend for the year “given the continuing uncertainty” after suspending payouts last April.
Michael Roney, chairman of Next, commented on the company’s ability to weather the storm caused by the pandemic, as well as outlining future trends for the industry.
“In last year’s Full Year Results, published just as the UK went into lockdown, we stated that our sector was facing a crisis unprecedented in living memory. We also stated that our strong balance sheet and profit margins would allow us to weather the storm,” Roney said.
“We expect the shift in consumer behaviour towards Online sales to continue for some time and one of our priorities during the year has been to continue the development of our Online platform. We accelerated part of our planned capital expenditure in the Online business, spending £121m on warehousing and systems.”
“Rather than proposing a dividend at this time, the directors consider it sensible to wait and see how the business performs once the current lockdown comes to an end and COVID restrictions are lifted.”