Nov 3, 2021
Next says higher sales to be absorbed by higher costs
Next has left its full-year profit forecast unchanged despite a better than expected performance in the third quarter, saying that much of the benefit of higher sales in recent weeks would be consumed by higher costs. Over the past five weeks, the fashion retailer has beaten its internal sales forecast by £14m. In the three months to October 30, full-price sales excluding finance income were 18.7 per cent higher than in the same quarter before the pandemic. It now expects full-year sales growth of 11 per cent, up slightly from 10.7 per cent, but made no change to its forecast for adjusted pre-tax profit of £800m. The impact of additional sales would be "Largely offset" by investment in digital marketing and the increased use of air freight to overcome supply chain problems. Online fashion retailer Asos said last month that its profit this year could fall by a third as sharply higher prices for inbound container shipments combined with elevated costs for air freight and a shortage of truck drivers and warehouse workers within the UK. Boohoo, another fast-fashion retailer, said in September that increased costs had knocked £26m from its first-half profits. Sales there were up 86 per cent in the third quarter and have risen almost three-quarters over the past year compared with the same period before the pandemic.
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