Next hit with £85m sales loss amid Ukraine and Russia closures
The announcement comes as the company revealed its profit before tax increased 140% year-on-year from £342.4m to £823m in FY22
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Next has revealed it has lowered its sales guidance for the financial year 2022/23 to £85m, down 2% following “anticipated losses overseas” amid the closure of the company’s websites in Ukraine and Russia.
The company has also lowered its profit guidance by 1.2% to £10m following the loss of £18m of profit.
The announcement comes as Next revealed its profit before tax increased 140% year-on-year from £342.4m to £823m in the 12 months to January 2022 (FY22), which is also up 10% compared to pre-Covid levels in 2019/20 (FY20).
Additionally, operating profit spiked 103.7% year-on-year from £444.5m to £905.4m. Overall, total group sales grew 34.1% year-on-year from £3.62bn to £4.86bn, and brand full price sales increased 32.4% to £4.26bn compared to FY21.
Online sales also grew 31.1% to £3.1bn compared to £2.36bn in FY20, and retail sales surged 50.1% to £1.43bn, although this fell 22.7% to £1.85bn compared to FY20 levels.
Next said it has increased its UK retail sales estimate by £78m to reflect its stores’ “better than expected” performance compared to three years ago.
Meanwhile, the company has reduced its expectations for UK online sales by £33m as a result of “better than anticipated” sales in its retail stores, including a £7m drop in Label sales and a £26m drop from the Next Brand sales.
In the first quarter of FY22, online sales grew in homeware and children’s clothing in lockdown. Next also launched four new clients on Total Platform, with that business delivering a year one profit of £10m and expected to deliver circa £20m in the year ahead.
Next said: “So far this year, UK sales are ahead of where we expected them to be, mainly driven by better than anticipated sales in our retail stores. We are also seeing a very sharp reversal of lockdown fashion trends, with a return to more formal dressing and notable reduction in spending on Home and very casual clothing.
“The buoyancy of our sales last year, along with the benign economic environment that accompanied it, make comparatives in the year ahead challenging. Last year’s strength contrasts with this year’s unusually high level of geopolitical and economic uncertainty. The combination of these factors make accurate guidance particularly difficult.”
