Business

Next's profits slump by 97 per cent - but some solace for retailer

Retailer Next saw profits crash 97 per cent to £9 million, though it had initially expected to be loss-making

RETAIL giant Next has upped its full-year earnings outlook for the second time in as many months after strong recent trading and a better-than-feared first half.

The fashion chain reported pre-tax losses of £16.5 million for the six months to the end of July against profits of £327.4 million a year earlier.

On an underlying basis, it saw profits crash 97 per cent to £9 million, though it had initially expected to be loss-making.

While full-price sales plunged 33 per cent, trading since the lockdown has proved resilient thanks to a strong online performance - and sales lifted 4 per cent in the seven weeks since its first half.

Next said it now expects full-year underlying pre-tax profits of £300 million - down heavily on the £729 million the previous year, but up from the £195 million previously predicted in July.

It warned it still expects to close 13 shops this year, down from 14 predicted in March.

"Full-price sales at the beginning of the second half have continued to exceed our expectations and we have revised our central scenario for full-year profit," Next said.

The group still expects sales to plunge 12 per cent for the rest of its financial year, leaving the full year 20 per cent lower overall, but this is far better than the 30 per cent prediction given in April - its best-case scenario for the year.

Next warned that sales could fall by 34 per cent over the full year if a second wave of the pandemic sees more widespread lockdown measures and store closures.

The recent seven weeks of trading was boosted by the weather and as fewer Britons travelled abroad, according to the group.

Half-year results showed total online sales jumped 14 per cent, while shop sales tumbled 61 per cent after they were forced to close amid the nationwide coronavirus lockdown.

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