Next upholds profit outlook despite uncertain climate

Next (LSE: NXT) maintained its profit and sales projections for the current year after fiscal 2023-24 earnings marginally exceeded expectations. The retail group cited an improved yet uncertain backdrop for shoppers..

For the 12 months ended January 27th, 2024, pre-tax profits rose 5% to £918 million - surpassing guidance of £915 million. Total revenues grew 5.9% to £5.84 billion over the period.

Despite the solid performance, Next struck a cautious tone, stating: "The consumer environment looks more benign than it has for a number of years, albeit there are some significant uncertainties." Disruption at the Suez Canal is not anticipated to materially impact stock levels.

Charlie Huggins, manager of the 'Quality Shares Portfolio' at Wealth Club, praised Next's "excellent operational execution" in a year of "deep economic uncertainty and rising inflation." He noted while the UK economy has fared better than expected, Next's core proposition "is clearly resonating with the UK consumer and is arguably stronger than ever."

Huggins said Next "appears quietly confident" for 2024-25, with shrewd investments improving growth prospects and moderating inflation reducing cost pressures. While cautioning the economy isn't fully rebounded, he said "the economic tea leaves don't read as grimly as at this stage last year."

Looking ahead, Next forecasts full-price sales to increase 2.5% in 2024-25, driving a 6% uplift in total group sales. Profit before tax is projected at £960 million, up 4.6% year-on-year, with earnings per share seen rising 4.8% to 606.3p.

The final ordinary dividend was lifted to 141p, taking the full-year payout to 207p per share.

Next shares jumped 3.6% at the London open. The stock is up 28% over the past year.

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