Next share price rises as annual earnings meet top end of guidance

on Mar 20, 2014
Updated: Apr 9, 2020
Listen, Thursday, March 20: Shares in Next (LON:NXT) have risen this morning, after Britain’s second-largest clothing retailer reported annual profit that met the top end of its guidance, driven by growth in online sales.

Next, which trades from over 500 stores in Britain and Ireland and almost 200 stores in more than 30 countries overseas, posted an 11.8 percent increase in pre-tax profit to £695 million for the year ended January 2014, reaching the upper range of the company’s forecast of £684 million-£700 million. Underlying earnings per share grew by 23 percent to 366p.

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As expected, Next’s profit for the first time in its history exceeded that of rival Marks & Spencer (LON:MKS) (Next share price: Fashion chain set to beat M&S earnings). M&S earned £665.2 million in its last financial year ended March 2013 and according to analysts’ estimates, is set to report underlying annual pre-tax profits of £628 million when releasing its final results on May 20.

Next noted in its statement today that its performance had been boosted by its online and catalogue business Next Directory, which saw sales jump 12.4 percent, helping to narrow the gap with Next Retail sales which climbed 1.7 percent. Total sales were up 5.4 percent to £3.7 billion. The group raised its dividend 23 percent to 129p in total.
**Another year of growth despite challenges**

“The year to January 2014 was a great year for Next,” Next Chairman John Barton said in the company’s statement today. “That performance gives us a solid platform for 2014. Our strategy remains the same, focused on our products, our profitability and returning cash to our shareholders. Notwithstanding the continued pressure on the UK consumer, we anticipate another year of growth for Next.”

According to the retailer, the modest improvement in Britain’s consumer economy is set to continue. However, the company remained cautious on the consumer spending outlook, saying “conditions are likely to remain far from buoyant and there are real risks to the sustainability of the current recovery”.

Data and surveys have shown an improving outlook for UK consumer spending, which generates about two thirds of gross domestic product, but retailers have been wary as inflation continues to outpace wage rises.
In the year ahead, Next expects pre-tax profit of between £730 million and £770 million, which would represent a five percent and 11 percent increase, respectively.
**Results underpin Next share price**
Next’s share price — which rose 55 percent in the year to the end of January – has been boosted by today’s results announcement. As of 08:20 UTC, the stock was trading at 6,690.00p, 1.67 percent up on the day.
According to AnalystRatingsNetwork data, three research analysts have a ‘sell’ rating on the fashion chain, 13 have it as a ‘hold’ and seven rate it as a ‘buy’. The consensus rating is ‘hold’ with an average price target of 5,849.24p.
**As of 08:21 UTC, buy Next shares at 6,690.00p.**
**As of 08:21 UTC, sell Next shares at 6,685.00p.**


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