Trading Statement - 1 August
2024
HEADLINES
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In the second
quarter full price sales1 were up +3.2% versus last year, exceeding our
expectations by £42m. Given the exceptional summer last year,
we had forecasted that Q2 would be down -0.3%.
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·
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In the first
half (H1), full price sales were up +4.4% versus last year. Our
guidance for this period was to be up +2.5%.
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·
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Total Group
sales2, including markdown, subsidiaries
and investments, in H1 were up +8.0%.
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·
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We have increased our profit guidance for the full year by
+£20m to £980m, up +6.7%
versus last year. The profit improvement came from additional
sales (£11m) and cost savings (£9m), mainly in logistics.
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1 Full price sales
include all items sold in NEXT Retail, NEXT Online including
third-party brands, and NEXT Finance interest income, but excludes
Sale events, Clearance, Total Platform commission and subsidiaries'
sales.
2 Total Group sales
are the sum of total sales (full price and markdown) from all of
the Group's divisions plus revenue from subsidiary companies.
Subsidiaries' turnover is calculated using our share of our
subsidiaries' turnover. For example, we own 74% of Joules so
we include 74% of their sales in our top line.
SALES PERFORMANCE
The weather last summer was exceptionally favourable
for clothing retailers, so we had planned for full price sales to
be down -0.3% in the second quarter this year. Our full price
sales in the UK (Online and Retail combined) were only slightly
ahead of our expectations, up +0.4%; Overseas sales online were
much better than expected, and were up +21.9%.
Group sales, which includes sales in our subsidiaries,
were up +8.0% in the first half. The additional growth in
Group sales came from the acquisition of FatFace and an increase in
our shareholding in Reiss, both of which occurred in Q3 last
year.
Full price sales performance versus last year, by
business division, is set out below for the second quarter and the
first half.
Full price sales by division versus last
year
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Q2: 13 weeks
to 27 July
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First half: 26 weeks
to 27 July
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Online NEXT UK
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+0.6%
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+2.2%
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Online LABEL UK
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+7.9%
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+4.8%
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Online Overseas
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+21.9%
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+22.8%
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Total Online
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+8.1%
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+8.4%
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Retail
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- 4.7%
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- 2.6%
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Total Product full price sales
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+3.2%
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+4.3%
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NEXT Finance interest
income
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+3.3%
|
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+4.9%
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Total NEXT full price sales
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+3.2%
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+4.4%
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Total Group sales
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+8.0%
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END-OF-SEASON SALE
Last year's surplus stock was particularly low, and
was down -22% on the previous year. This year we returned to
more normal levels of surplus and, as planned, went into Sale with
surplus stock up +21% on last year (down -5% on two years
ago). Clearance rates are in line with our internal
forecasts.
FULL PRICE SALES FOR THE REST OF THE YEAR
We are maintaining our guidance for full price sales
in the second half to be up +2.5% versus last year. This
might seem cautious when compared with the performance in the first
half, which was up +4.4%. However, when compared to
two years ago, growth in
the first half and the forecast for the second half are almost
identical. The table below shows our forecast growth for both
halves of the year compared to last year and two years ago.
Full price sales guidance
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Versus
last year
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Versus
2 years
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First half (actual)
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+4.4%
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+7.7%
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Second half (forecast)
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+2.5%
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+7.3%
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Full year (forecast)
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+3.4%
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+7.5%
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GUIDANCE FOR SALES, PROFIT AND EARNINGS PER
SHARE
Our revised guidance for sales and
profit3
for the full year is summarised below.
Guidance for the full year 2024/25
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Full year
£ (e)
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% Versus 2023/24
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Full price sales
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£4.9bn
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+3.4%
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Total Group sales inc.
markdown, subsidiaries and investments
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£6.2bn
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+6.0%
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NEXT Group profit before tax
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£980m
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+6.7%
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Pre-tax EPS
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818.8p
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+8.1%
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Post-tax EPS
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616.5p
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+6.5%
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3 NEXT Group profit
before tax excludes: (1) the cost of brand amortisation, (2) the
profit attributable to shares that we do not own in subsidiary
companies, and (3) an exceptional, non-cash, loss relating to the
closure of our defined benefit pension scheme.
Total Group sales for the full year are expected to
be up +6.0% on last year, which is +2.6% higher than our expected
growth in NEXT Trading full price sales of +3.4%. The
difference is the result of acquisitions completed during last
year. We acquired 97% of FatFace in October 2023 and
increased our equity share in Reiss from 51% to 72% in September
2023.
INTERIM RESULTS
We are scheduled to announce our results for the first
half of the year on Thursday 19 September 2024.
Forward Looking Statements
Certain statements in this Trading
Update are forward looking statements. These statements may contain
the words "anticipate", "believe", "intend", "aim", "expects",
"will", or words of similar meaning. By their nature, forward
looking statements involve risks, uncertainties or assumptions that
could cause actual results or events to differ materially from
those expressed or implied by those statements. As such, undue
reliance should not be placed on forward looking statements. Except
as required by applicable law or regulation, NEXT plc disclaims any
obligation or undertaking to update these statements to reflect
events occurring after the date these statements were
published.
Date:
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Embargoed until 07:00 hrs,
Thursday 1 August 2024
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Contacts:
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Jonathan Blanchard, Chief
Financial Officer (analyst calls)
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NEXT PLC
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Tel: 0333 777 8888
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Alistair
Mackinnon-Musson
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Email:
next@rowbellpr.com
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Rowbell
PR
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Tel: 020 7717 5239
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Photographs:
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https://www.nextplc.co.uk/media/image-gallery/campaign-images
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