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Next warns of tough year ahead as profits rise by 5%

Thursday March 24th 2016

Fashion and homewares retailer Next has said the year to January 2016 was “solid” with pre-tax profit rising by 5% to 821.3 million.

Total group sales increased by 3% to £4.1 billion.

Sales at Next Directory, its online and catalogue business, climbed by 7.7% with full price sales rising by 6.5%. The number of active customers increased by 11% to 4.6 million, driven by the acquisition of UK 'cash' customers and customers overseas.

Meanwhile, sales at Next’s high street stores edged up 1.1% with net new space contributing 2.4% to growth. Full price sales rose by 2.2%.

The company said it continued to invest in the business during the year and spent £151 million on new shops, a new warehouse and systems.

Looking at the year ahead, Next chief executive Lord Wolfson said Next may well be facing the toughest year since 2008.

He added: “In addition to our generally more cautious outlook for the economy, we also believe that there may be a cyclical move away from spending on clothing back into areas that suffered the most during the credit crunch.”

The company is forecasting profits for the year to the end of January 2017 to be between between £784 million and £858 million which would range from a fall of 4.5% to growth of 4.5%.

In addition, the company estimates that full-price Next brand sales will range from a drop of 1% to growth of 4%.

Next chairman John Barton said: “2016 will be a challenging year with much uncertainty in the global economy. For Next it makes it particularly important that we remain focussed on our core strategy of delivering long term sustainable growth in EPS, investing in the business, improving the design and quality of our products and returning surplus cash to shareholders.”