By James Davey
LONDON (Reuters) -British clothing retailer Next reported a 5% rise in annual profit and kept its guidance for the current year, saying it did not expect a big hit from stock delays due to Red Sea shipping disruption.
Next had cautioned in January that sales growth would likely moderate if disruption to shipments through the Suez Canal, due to attacks by Iran-aligned Yemeni Houthi militants in the Red Sea, continued through 2024.
It said on Thursday that although average transit times had risen by seven to ten days, its product teams had adjusted contract bookings to account for this delay.
“In addition, higher freight costs have been factored into our prices going forward but we still anticipate that our prices will fall,” it said, pointing to easing factory gate prices.
Selling prices on like-for-like goods were currently down 2.0% and it expected deflation of 0.5% in the second half.
Next shares were up 2% in early trade.
The company, often considered a gauge of how British consumers are faring, said it still expected a profit before tax and one-off items of 960 million pounds ($1.23 billion) in 2024-25, with full-price sales up 2.5%.
For the year ended Jan.
27 it made a profit on the same basis of 918 million pounds, versus guidance of 915 million pounds, on total sales up 5.9% to 5.84 billion pounds.
“On the face of it, the consumer environment looks more benign than it has for a number of years, albeit there are some significant uncertainties,” Next said.
It said positive factors included wages rising faster than prices and zero inflation in the group’s own products.
Risk factors were a weakening jobs market and consumers having to renegotiate mortgages at higher rates.
Next, whose shares have increased 24% over the last year, forecast a 5% rise in full price sales in its first quarter year-on-year, followed by a flat second quarter when comparative numbers are tougher.
($1 = 0.7817 pounds)
(Reporting by James DaveyEditing by Sarah Young and Mark Potter)
