The group will be one of the first big names to emerge from the starting blocks with its Christmas trading update, ahead of a flood of similar stock market announcements.
Next has proven to be a resilient performer as the high street struggles with the economic fallout from the coronavirus crisis, lockdowns and competition from online rivals such as Asos and Boohoo.
In early November, the fashion and homewares chain posted a double-digit rise in sales, but warned that stock availability remained “challenging” due to supply chain issues and shortages of workforce.
The group reported third-quarter sales up 17% from two years ago after a better-than-expected recent performance, although it still expected growth to slow to 10% in its final quarter.
He said this was due to a decrease in pent-up demand, while growth was also expected to be hampered by supply issues, with disruptions ongoing despite recent improvements.
Next added that rising inflation was likely to hit demand for more discretionary shopping as households tightened their belts.
The group raised its full-year sales growth outlook to 11% from 10.7% previously forecast, but maintained its full-year profit forecast at £800m. That compares to £342m in the pandemic-hit 12-month period to January 2021 and £749m in the year to January 2020, company analysts noted. investment company AJ Bell.
Ahead of Thursday’s expected trade update, analysts said: “However, Omicron has seen its head up since the last trade update in November and issues such as wage inflation, commodity inflation and Shipping shortages have impacted the performance of other retailers, whose online sales model has also been put under pressure by higher product return rates.
“It will be interesting to see if [Next chief executive] Lord Wolfson and his team report any of these issues and whether they are impacting margin and profit.
“Analysts and shareholders will also be looking for an update on plans to return what Next calls excess cash to investors.
“Alongside this second quarter trading statement, Next announced a plan to return £240m to investors. The FTSE 100 company paid £140m – or 110p per share – on September 3 and said it would pay the rest – £100m or around 78p per share – after the Christmas trading update, assuming everything went as planned.
“Next also noted that it would then seek to resume ordinary dividend payments in the year through January 2023, when analysts and shareholders may also consider resuming share buybacks as well.”
During its half-year results in September, the retailer warned of price hikes due to supply chain disruption and said staff shortages could impact its deliveries ahead of Christmas .
Next said parts of the business were starting to come under pressure from a lack of foreign workers, particularly in logistics and warehousing, which could affect its delivery service during the peak holiday season.
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Fashion giant Next warns of inventory ‘challenges’ even as sales soar: reaction
