NEXT expected to unveil higher sales and profits despite consumer spending pressure

NEXT expected to unveil higher sales and profits despite consumer spending pressure

NEXT is set to unveil higher sales and profits as the high street giant hopes to shrug off concerns over consumer spending.

The retailer is among high street brands seeking to grow amid a challenging backdrop of continued cost inflation and under-pressure shoppers who have seen household bills soar. The business will reveal on Wednesday how it performed over the year to January.

Investors are expecting the company to reveal that sales grew by around 6.9% to £4.6 billion over the year. It is also predicted to show that pre-tax profits rose 4.5% to £860 million, having increased its projection from £840 million set in November.

Investors and analysts will be keen to hear how trading has performed during the start of the new financial year as the cost-of-living crisis continues to bite.

In January, CEO Lord Simon Wolfson said prices were set to peak at about 8% in the spring but will ease back afterwards to “no more than” 6% in the second half. Shareholders will be hoping higher pricing has not impacted demand from shoppers in recent weeks.

CEO Lord Simon Wolfson

NEXT CEO Lord Simon Wolfson

Aarin Chiekrie, Equity Analyst at Hargreaves Lansdown, said: “While these numbers are commendable, given the challenging environment for retailers, it’s important not to lose sight of the challenges ahead.

“To cope with rising costs, NEXT is raising prices. With the group set to pass on 6-8% cost inflation, there is a question mark over whether consumers can stomach these hikes.”

In the previous update, NEXT appeared more cautious over the current financial year. Bosses steered guidance towards a potential 8% drop in profits to £795 million, due to cost increases of over £100 million relating to wages and utility bills.

Easing wholesale energy prices could help support profitability but the overall performance will still be largely driven by how strong demand from shoppers is over the year.

Earlier this month, NEXT confirmed its return to St. Enoch shopping centre in Glasgow. Glasgow’s largest shopping centre, St. Enoch, is experiencing a renaissance thanks to a £40 million repurposing of the former BHS department store.

This is not the first retail destination that NEXT has previously exited and is now returning to – the retailer is also set to make its return to Gloucester Quays, the outlet and dining destination in the South West. The move comes after a ‘record breaking’ 2022 sales period for the destination.

In contrast, NEXT recently closed its doors in East London’s Westfield Stratford shopping centre. The store has been closed since Friday 17 February, with store signage informing customers that they can still shop with the brand online.

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