Next ups profit forecast on strong Christmas sales
LONDON (Reuters) - Next (NXT.L), Britain's second largest clothing retailer, raised its annual profit forecast after fourth quarter sales came in significantly ahead of its expectations, helped by a policy of not discounting before Christmas.
The firm, whose shares have risen 47 percent over the last year, also said on Friday it would pay a special dividend of 50 pence a share at a cost of 75 million pounds ($123.3 million) and outlined a plan for more payouts rather than share buybacks.
Next said it now expected a year to end-January 2014 pretax profit of 684-700 million pounds, ahead of its previous guidance of 650-680 million pounds.
The group, which unlike rivals has a long standing strategy of never going on sale before Christmas, said total sales rose 11.9 percent in the November 1 to December 24 period and are now up 5.0 percent year to date.
That compares with a rise of 4.3 percent in its third quarter and previous company guidance for full year sales growth of 2.0-3.75 percent.
The strong performance stands in stark contrast to Debenhams (DEB.L), Britain's second largest department store group, which issued a profit warning on Tuesday, blaming the highly promotional pre-Christmas promotional environment.
That was also an ominous sign for Britain's biggest clothing retailer Marks & Spencer (MKS.L), whose rare move to slash 30 percent off clothing prices in the run up to Christmas has prompted fears it too had suffered poor trading.
Alongside Next in the winners category was John Lewis JLP.UL, the country's No. 1 department store group, which also posted a strong trading update on Thursday.
Next attributed the step-up in Christmas trade to improvements in its seasonal knitwear, nightwear and gift offer.
It said increased confidence in online deliveries meant that more customers also continued to trade with the Next Directory internet and catalogue business right up to the weekend before Christmas.
Next Directory sales soared 21 percent, while sales at the firm's over 500 stores in Britain and Ireland and about 200 stores in over 30 countries overseas increased 7.7 percent.
The retailer cautioned however it was very unlikely that the strength shown in the Christmas quarter would continue through the first half of the new financial year.
Shares in Next closed Thursday at 5,530 pence, valuing the business at 8.63 billion pounds. ($1 = 0.6084 British pounds)
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