Next shares jumped on Thursday after the retailer announced another year of strong financial performance and operational progress.
We’re running out of superlatives for Next. The British retailer’s profits and sales are growing at a pace as the group improves its brand management, infrastructure and underlying efficiency.
Next’s profit before tax rose 10.1% to £1,011m, surpassing the £1bn mark for the first time.
The retailer has successfully navigated the destruction of the UK high street and the cost-of-living crisis to become a lean, cash-generating fashion retailer with a deep online presence.
Next full price sales rose 5.8% while group sales, including its subsidiaries, jumped 8.2%.
“Next is the envy of the retail sector,” said AJ Bell’s Russ Mould.
“Once again it has upgraded sales and profit guidance, leaving its rivals in the dust. Next is typically a cautious outfit, preferring to under-promise and over-deliver, which makes its latest optimism a surprise given the fragile market backdrop.
“A strategic shift that broadens choice for shoppers is paying off. Next sells its own products directly and through third parties, thereby widening the reach for its goods. Next also sells third party products through its website to boost the chances of site visitors finding something they want and not opening a new tab and looking elsewhere.”
Indeed, Next itself highlighted that it now operates two distinct businesses, its Next brand and associated outlets and platforms, and an aggregation platform that sells external brands.
Its operational success is translating into strong cash generation, which Next intends to return to shareholders in the form of dividends and buy backs.
Next said it plans to return £286m to shareholders in the form of dividends and £316m in buy backs.
Investors loved the news are Next shares were 7% higher at the time of writing.