{"id":220163,"date":"2023-03-29T10:00:42","date_gmt":"2023-03-29T09:00:42","guid":{"rendered":"https:\/\/theindustry.beauty\/?p=220163"},"modified":"2023-03-29T18:46:02","modified_gmt":"2023-03-29T17:46:02","slug":"industry-reacts-to-next-results-is-next-now-ex-growth","status":"publish","type":"post","link":"https:\/\/theindustry.beauty\/industry-reacts-to-next-results-is-next-now-ex-growth\/","title":{"rendered":"Industry reacts to NEXT results: \"Is NEXT now ex-growth?\""},"content":{"rendered":"

NEXT<\/a><\/span> has said it expects to raise its prices more slowly over the year ahead as it revealed better-than-expected annual profits\u00a0for the year ending January 2023.<\/strong><\/p>\n

The retail giant reported a 5.7% rise in pre-tax profits to \u00a3870.4 million for the year to January 2023<\/a><\/span>, which was higher than the \u00a3860 million it had previously pencilled in. Full-price sales rose 6.9% year-on-year.<\/p>\n

TheIndustry.beauty has curated commentary from experts and analysts to gauge their reaction and gain insight into how the future looks for the high street giant:<\/strong><\/p>\n

Michael Roney, Chairman at NEXT:<\/strong><\/h3>\n

\u201cWe have prepared (and budgeted) for a difficult year. We are very clear on our priorities. If we continue to improve our product ranges, relentlessly manage our costs and upgrade our customer service, whilst also developing new business opportunities; we can lay the foundations for an exceptionally strong business and still deliver healthy profits, cash flow and dividends.\u201d<\/p>\n

Farah Thalji, Senior Director at Simon-Kucher & Partners:<\/strong><\/h3>\n

\u201cInvestors will be assessing Next PLC\u2019s annual results closely this morning, concluding a dynamic year which saw profit warnings in Q3 as well as profit hikes after better than expected sales over the Christmas shopping period. Final round-up reflects trading sales increased 8.4 per cent to \u00a35.1 billion for 2022, with a more muted 6.9 per cent growth in full-price sales.<\/p>\n

\u201cLooking ahead to the rest of 2023, the UK's clothing retail sector will likely face similar challenges to the rest of the economy, including consumers battling a cost-of-living crisis, supply chain disruptions and inflationary pressures so time will tell if Next can sustain its success for the remainder of the year.<\/p>\n

\u201cIncreasing competition from online retailers, less committed shoppers, changing consumer preferences on sustainability and rising labour costs will likely afflict the sector, leading to refreshed commercial strategies focusing on continued efforts to balance e-commerce with brick-and-mortar.\u201d<\/p>\n

Russ Mould, AJ Bell Investment Director:<\/strong><\/h3>\n

\u201cOne might assume that NEXT chief executive Simon Wolfson has one of these signs on his office door saying \u2018under-promise, over-deliver\u2019. He is one of the few corporate leaders who never tries to make a situation look better than it is, and true to his word the latest guidance from Next is as cautious as you can get.<\/p>\n

\u201cTrading has been fairly resilient over the past 12 months but the company is preparing for a tough year ahead. There is no upgrade to earnings guidance and there is even comment on the question people are starting to ask \u2013 is NEXT now ex-growth? It\u2019s no wonder the share price has taken a tumble.<\/p>\n

\u201cNEXT is in an odd situation. While lauded as a best-in-class retailer, there is no denying that growth has slowed over the past eight years. That period also coincides with a concerted push to broaden its income streams, developing its website as a hub for third parties to sell their brands while making its stores more relevant via click and collect services. NEXT's decision not to abandon its high street presence was a wise one, particularly as physical stores are coming back into fashion.<\/p>\n

\u201cIts purchase of third-party brands out of administration such as Cath Kidston provide opportunities to boost its intellectual property at a discounted price. It is clearly going to accelerate this strategy given the appointment of Jeremy Stakol as a board director to oversee investments, acquisitions and third-party brands.<\/p>\n

\u201cHigh street kingpin Mike Ashley won\u2019t be pleased as he\u2019s made a successful career out of picking at the bones of failed retailers \u2013 now he faces serious competition from NEXT for the assets. However, simply picking up retail brands and stock on the cheap doesn\u2019t always equate to positive returns.\u201d<\/p>\n

Charlie Huggins, Manager of the \u2018Quality Shares Portfolio\u2019 at Wealth Club:<\/strong><\/h3>\n

\u201cThis is another solid performance from the bellwether of the UK High Street, reinforcing NEXT's reputation as one of the best run UK retailers. Many other retailers have struggled in the current environment, but NEXT's proposition is clearly resonating with the UK consumer. The removal of pandemic restrictions has certainly helped, leading to a strong recovery in store sales. But this shouldn't take away from NEXT's excellent operational execution.<\/p>\n

\u201cLooking to the year ahead, the environment is set to get tougher. Next's sales are expected to fall modestly, with profits down close to 10%, as cost pressures take their toll. NEXT expects cost inflation to peak at around 7% in the spring summer season before falling to 3% in the second half. This is materially lower than previously feared, due in part to falling freight costs. It means NEXT doesn't have to push through such big price increases, which in turn should support demand for its wares.<\/p>\n

\u201cOverall, NEXT, and the rest of UK retail, are still facing a very difficult economy in 2023. But with inflation starting to moderate, things are not looking as bad as they were a few months ago.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

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