* Raises 2012/13 profit forecast to 611-625 mln pounds
* Nov 1-Dec 24 total sales up 3.9 pct
* Next Retail sales up 0.8 pct, Directory up 11.2 pct
* Sees 2013/14 profit growth in line with sales growth of up
to 4 pct
* Shares up 2.3 pct
By James Davey
LONDON, Jan 3 Next, Britain's No.2
clothing retailer, nudged its full-year profit forecast higher
after an increase in sales over the Christmas period was
supplemented by improved margins due to a renewed attack on
Shares in Next, which has a long-standing policy of never
going on sale before Dec. 26, rose 2.3 percent on Thursday,
topping the FTSE 100 leader board, after it forecast
profit growth in both the 2012/13 and 2013/14 years even though
it expects the consumer environment to stay subdued.
With Britain facing a possible triple-dip recession, many
retailers have been finding the going tough as consumers fret
over job security and a squeeze on incomes.
"I think it is getting slowly better in that the difference
between inflation and wages is narrowing and I think will
probably continue to narrow," chief executive Simon Wolfson told
"But certainly for the rest of 2013 I still think real
incomes will drop, albeit at probably a lower rate than they
fell last year," said Wolfson, a supporter of Britain's ruling
Conservative Party, who sits in the upper house of Parliament.
Next has generally defied the economic gloom, helped by its
strong online offer, a constant stream of new store openings and
diversification into homewares and overseas markets.
On Wednesday, John Lewis, Britain's largest
department store group, posted record Christmas sales, driven by
stellar online trade. That performance was mirrored on Thursday
by upmarket grocer Waitrose, which is also part of the John
Kicking off the post-Christmas retail reporting season for
listed companies, Next said total sales, excluding VAT sales
tax, rose 3.9 percent in the Nov. 1 to Dec. 24 period.
That compared with an increase of 2.7 percent in its third
quarter, giving a year to date rise of 3.9 percent - in line
with guidance of 3.0-4.5 percent.
Sales at Next's over 500 stores in Britain and Ireland rose
0.8 percent in the November, December period while sales at the
Directory home shopping, internet and catalogue business
increased 11.2 percent.
Although sales were in line with internal expectations, cost
control measures, markdowns and gross margins were all slightly
better than expected, the firm said, adding that its
post-Christmas Sale had started well.
Wolfson said a host of costs, such as in warehousing,
distribution and store operations, had come in below budget.
Further cost savings have been identified for the 2013/14 year.
Next now expects a year to end-Jan. 2013 pretax profit of
611-625 million pounds ($995 million-$1.02 billion), up from
previous guidance of 590-620 million pounds.
It forecast earnings per share growth for 2012-13 of 14-17
percent, partly reflecting a 241 million pounds share buyback.
Shares in Next, up 38 percent over the last year, were up 84
pence at 3,856 pence at 1122 GMT, valuing the business at 6.2
"Next remains our top pick of the FTSE 100 Retailers, a core
sector holding underpinned by a flexible store base and the
benefits of Directory," said Peel Hunt analyst John Stevenson,
who raised his 12-month target price to 4,000 pence.
For the 2013-14 year the firm guided to sales growth of
1.5-4.0 percent, with profit up in line with sales and a further
250 million pounds of share buy backs.
"International and online will continue to grow and we will
continue to open profitable new space," said Wolfson, flagging
250,000 square feet for 2013-14, with new space skewed to the
He said Next was not seeing any rise in the cost of its
spring/summer stock, a lot of which has already been purchased.
"So we can say that with some certainty there will be zero
inflation in the price of spring/summer stock in like-for-like