Next PLC (LON:NXT) tumbled to a loss in the first half of the year but has upped its full-year profit guidance noting that online clothing sales have been significantly stronger since stores reopened than before the coronavirus pandemic struck, indicating some lockdown habits have stuck.
The FTSE 100-listed retailer reported a 33% decline in full-price sales for the half-year to end-July, 2020, with total revenue down 36% to GBP1.3bn.
At the statutory level, the clothing chain tumbled to a GBP16.5mln loss before tax from a GBP327.4mln profit a year ago, but without including lease obligations said its underlying profit before tax was GBP9mln.
What’s more, surplus cash of GBP347mln was generated, which will be used as part of a plan to cut net debt by GBP462mln to GBP650mln by the end of the year, following the decision to cancel the dividend and share buyback earlier in the year.
As well as being able to take advantage of the shift to online shopping, which even before lockdown accounted for more than half of Next’s turnover, the group also has a strong out-of-town presence in its store estate, as well as benefiting from its sizeable range of homeware, childrenswear, loungewear and sportswear businesses, which have all done relatively well during the pandemic.
Looking forward, the company said prospects for the next six months “remain as uncertain as the outlook for the virus itself; never has our guidance been more tentative or as broad in its possible outcomes”.
In the past seven weeks, full-price sales have risen 4% on last year, which the company has attributed to some changeable recent weather and fewer overseas holidays.
In all its forward guidance scenarios for the year, the group said it is expected to generate profits and cash, and cut debt.
For the full year, the central guidance is for a GBP300mln profit on sales down 12%, a big improvement on the GBP195mln profit it had expected in July.