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Britain’s Next ups profit forecast as sales rise

Said it expected a year to end-January 2013 pretax profit of £611-625 million

Gulf News

London: Next, Britain’s No.2 clothing retailer, nudged its full-year profit forecast higher on Thursday as it reported a rise in sales in the run-up to Christmas along with better margins.

Kicking off the post-Christmas UK retail reporting season for listed companies, Next, which has a long standing policy of never going on sale before Christmas, said it expected a year to end-January 2013 pretax profit of £611-625 million ($995-$1.02 billion).

Its previous guidance was £590-620 millions.

“Although sales have been in line with our expectations, cost control measures, markdowns and gross margins have all been slightly better than expected,” the firm said.

With Britain facing the prospect of a triple-dip recession, many retailers have been finding the going tough as consumers fret over job security and a squeeze on incomes.

Next has generally defied the gloom, helped by its strong online offer, a constant stream of new store openings and diversification into homewares and overseas markets.

Next said total sales, excluding VAT sales tax, rose 3.9 per cent in the November 1 to December 24 period.

That compares with an increase of 2.7 per cent in its third quarter, giving a year to date rise of 3.9 per cent — in line with guidance of 3.0 to 4.5 per cent.

Sales at Next’s over 500 stores in the UK and Ireland rose 0.8 per cent in the November, December period while sales at the Directory home shopping business increased 11.2 per cent.

The firm said its post-Christmas Sale had started well.

Next forecast earnings per share growth for the 2012-13 year of 14-17 per cent, partly reflecting £241 million of share purchases.

For the 2013-14 year the firm guided to sales growth of 1.5-4.0 per cent, with profit up in line with sales and a further £250 million of share buy backs.

“We think it is unlikely there will be any dramatic change in the consumer environment in the year ahead,” it added.

Shares in Next, up 38 percent over the last year, closed Wednesday at 3,772 pence, valuing the business at £6.08 billion.