The group will be one of the first big names to come out of the starting blocks with its Christmas update, ahead of a flood of similar stock announcements.
Next has proven to be a resilient player as Main Street battles the economic fallout from the coronavirus crisis, lockdowns and competition from online rivals such as Asos and Boohoo.
In early November, the fashion and housewares chain posted double-digit sales growth, but warned inventory availability remained “difficult” due to supply chain issues and labor shortages. of work.
The group reported third-quarter sales up 17% from two years ago after a better-than-expected recent performance, although it still expects growth to slow to 10% in its final quarter. .
He said this was due to a decrease in pent-up demand, while growth is also expected to be hampered by supply issues, with disruptions underway despite recent improvements.
Next added that rising inflation is likely to hit demand for more discretionary purchases as households tighten their belts.
The group raised its sales growth outlook for the full year to 11% from 10.7% previously forecast, but kept its annual profit forecast at £ 800million. This compares to £ 342million in the 12-month pandemic-hit period through January 2021 and £ 749million in the year through January 2020, analysts noted. the investment firm AJ Bell.
Ahead of Thursday’s expected trade update, analysts said, “However, Omicron has raised its head since the last trade update in November and issues such as wage inflation, commodity inflation and Transportation shortages had an impact on the performance of other retailers, whose model line was also put under pressure by higher product return rates.
“It will be interesting to see if [Next chief executive] Lord Wolfson and his team point out one of these issues and indicate whether they have an impact on margin and profits.
“Analysts and shareholders will also seek an update on plans to return what Next calls excess liquidity to investors.
“Along with this second quarter business statement, Next announced a plan to return £ 240million to investors. FTSE 100 paid £ 140million – or 110p per share – on September 3 and said it would pay the remainder – £ 100million or around 78p per share – following the update Christmas day, assuming everything went as planned.
“Next also noted that it would then look to resume ordinary dividend payments within the year until January 2023, when analysts and shareholders may also consider resuming share buybacks.”
In its half-year results in September, the retailer warned of price increases due to a disruption in the supply chain and said staff shortages could impact its deliveries heading into Christmas. .
Next said some parts of the company are starting to come under pressure from a shortage of foreign workers, especially in logistics and warehousing, which could affect its delivery service as the peak season approaches. holidays.
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