Next plc has announced its half-year results for the 26 weeks, ended 30th July 2022, stating brand full price sales have increased by 12.4% compared to 2021, and profit before tax at £401m, up 16% since 2021. This is the most difficult trading environment since the 2008 financial crisis, with inflation levels, cost-of-living crisis, and the fall of the pound, the retail market has seen significant damage.
The sales in August presented as below expectation, however improvements were seen in September. Next plc hopes to see benefits in profits after the implicated government measures.
Full price sales are down -1% in comparison to pre-Covid, however the outlook for the full year up until January 2023 anticipates a profit of around £170m, so an increase of +14% from the previous year. As well as this, Next plc are forecasting customer receivables balance to be £1.25bn, which is a +8% increase from 2021, and 1% ahead of pre-Covid levels from January 2020.
Next plc sees priorities as being adaptable in the current climate. Online warehouses are to see more efficient operating systems put in place, as well as the speed and accuracy of delivery services, and enhancing the website to be more functional for navigation and search. This direct move to focus on improving their online sales aim to match the current economic situation.
Charlie Huggins, Head of Equities at Wealth Club, commented: “Next is seen as a bellwether of the UK High Street and today’s cut to full year guidance lays bare the challenges being faced. ASOS and Boohoo’s trading performance has been nothing short of dire. Even Primark’s recent trading update called out significant margin pressures. In this context, Next’s half year results are more resilient than most.
“Next looks better positioned than most of its peers to weather the storm, and emerge stronger in light of its high margins, robust cash flows and strong balance sheet. But 2023 could be a very difficult year the way things are shaping up.”