Next cuts sales and profit guidance

Next plc has reported that its profit before tax is up 16% compared to the previous year at £401m, and up 22% compared with 2019 despite issuing its second profit warning this year.

The company said the profit warning is due to soaring inflation and a devaluation of the pound which has lowered consumer confidence. 

The British clothing and housewares chain said that it now expects profits for the full-year to come in at  profit guidance of £840m, compared with previous guidance of £860m. 

Its brand full price sales are up 12.4% compared with 2021 and  up 22.3% against 2019, however Full-price sales in the second half are expected to drop 1.5% rather than climb 1%.  

Next said it was hoping to “see benefits from recent government measures”, stating that there are “so many variables at play – energy, freight, employment, tax, economic migration, exchange rates, etc – that today, more than ever, it is not possible to predict the future on the basis of the past.

“It is over forty years since the UK last experienced an inflationary shock on the scale we are witnessing today; and the UK economy of the 1970s – with its reliance on highly subsidised and geographically concentrated heavy industry – was incomparably different to the economy of today.”

It added: “We have used our recent trade, along with some internal and external economic data, to build a picture of what we think is going on and how the company is likely to be affected over the coming months.”