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Next (NXT) expects higher sales in 2021, shares rise 2% on Thursday
Next (NXT) shares were trading 2% higher early on Thursday after the British clothing retailer upgraded its guidance for the full year, following a sharp rise in digital sales and the imminent reopening of physical stores.
Next believes that consumer spending will be healthy when the lockdown finally ends, and “perhaps optimistically” expects stores to continue trading for the rest of the year.
These expectations were central to its decision to guide for total sales of £4.3bn and profit before tax of £700m for 2021.
This would mark a recovery after sales slumped 17% to £3.6bn and profits dipped 53% to £342m during the 12 months to 30th January.
It would also put it in the same ballpark as the bottom line in 2019 and early 2020, before the outbreak of COVID-19.
While Next is eager for store reopenings, its digital platform has thrived during the pandemic, with online sales soaring 60% during the first two months of the year, compared to the same period in 2019.
Analysts at Liberum said that stores are still “key to its success”, but noted that Next has evolved into being an online business first and foremost.
Liberum expects more growth in this area, with new brands coming on board and further development of its platform and licensing models.
It added: “Retail profitability will be supported by the ongoing rent renegotiations and potential rates reform, while the finance income is underpinned by a quality debtors book.”
Following the optimistic update and commentary, Next was trading in positive territory on Thursday.
NXT shares rose after the first bell in London and were up around 2.16% at 10:35am for a new share price of 8,030p.
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