By James Davey
LONDON (Reuters) -British clothing retailer Next reported a 10% rise in annual profit but trimmed its guidance for 2022-23, with a better than expected start to the year in its home market offset by a deteriorating picture overseas.
Shares in Next, which trades from about 500 stores and online, were down 3.1% at 0846 GMT after it lowered its sales guidance for the current year by 85 million pounds ($112 million) and its profit guidance by 10 million pounds.
The cut reflected the closure of its websites in Ukraine and Russia, and the moderating of growth expectations in some other markets.
Next said UK sales this year were ahead of where it expected them to be, driven mainly by better-than-anticipated sales in its retail stores.
It highlighted a very sharp reversal of lockdown fashion trends, with a return to more formal dressing and a notable reduction in spending on home and very casual clothing.
Next has proved a resilient performer during the COVID-19 pandemic, benefiting from its long-established online operations.
However, it is concerned that pressures on consumers’ finances from higher energy, fuel and food prices as well as higher taxes and mortgage rates could reduce discretionary spending on clothing and homeware.
It has also flagged that a return to spending on overseas holidays and other social activities could depress demand.
While Next maintained its forecast for its own prices to rise by 3.7% in the first half, it raised its forecast for the second half to 8%, reflecting higher freight rates and increased manufacturing costs.
The group made a pretax profit of 823 million pounds in the year to January 2022, in line with guidance, on full price sales up 12.8% versus pre-pandemic 2019-20 results.
Its new forecast for the year ending January 2023 is full price sales growth of 5% and a pretax profit of 850 million pounds.
($1 = 0.7577 pounds)
(Reporting by James Davey, Editing by Paul Sandle)
