Belfast Telegraph

Next 'very cautious' despite 12% annual profits increase

By Graeme Evans

Next said it is remaining "very cautious" despite building its advantage over rival Marks & Spencer with a 12% rise in annual profits.

The surplus of £782.2m comes after a year in which overall sales topped £4bn for the first time with an increase of 7.2%.

Next, which last year beat the profits figure achieved by rival M&S, said it hoped to make as much as £835m in the current financial year.

However, it remains cautious about prospects and has pencilled in sales growth of between 1.5% and 5.5% in the current year.

This is weaker than the range of 2.5% and 7.5% the company forecast in December.

Next chief executive Lord Wolfson said it would be a mistake to be over-optimistic despite the company's recent progress.

He added: "Although the consumer economy looks benign, we remain very cautious in our sales budgets.

"Whilst we are happy with most of our current product ranges, we recognise that some collections are not as strong as they were at this point last year.

"In addition, during the spring and summer seasons, we face very tough comparative numbers from last year, when sales were assisted by unusually warm weather."

Shares opened more than 3% lower yesterday. The sales figures for 2014 are at the top end of the guidance issued by the company last March, despite the impact of a warm autumn.

Trading space increased by 330,000 square feet during the year to 7.4m square feet. Store numbers remained broadly the same, with the impact of 20 new stores being offset by the closure of 22 smaller, less profitable stores.

Out of the company's 539-strong store estate, almost half are either new or have been significantly extended.

The company has around 20 stores around Northern Ireland. Next Directory sales were 12.1% ahead of last year, with the figure in the UK up by 8.2% and overseas online sales ahead by 61%.

The number of active customers increased by 11.3% to 4.1m.

The company achieved cost savings of £42m in the year, which matched the level of cost increases.

In the year ahead, the company expects costs to rise £36m, with wage hikes accounting for half of this.

Conlumino analyst David Alexander said Next's relentless focus on savvy investment and careful management, together with its refusal to bow to the actions of its competitors, means that its growth story is set to continue.

"Lord Wolfson may not be one to stick his neck out too much on the optimism front, but the wheels are in motion for Next, which remains a retailer in the ascendancy," he said.

Belfast Telegraph