Next annual profits dip amid warning of further decline

// Next profit before tax slips 0.4% for the year ending January 2019
// Total group sales for the year is up 2.5%
// Next’s online division booked double-digit growth, but in-store sales and profit lagged
// Retail giant predicts further decline for the year ahead amid challenging trading conditions

Next has recorded a dip in full-year profits despite an uptick in group sales, although the performance from its physical stores continues to lag.

The full year results prompted the bellwether retailer to forecast a further decline over the year ahead as it said high street trading will remain “challenging”.

For the year ending January 2019, Next saw pre-tax profits slip by 0.4 per cent year-on-year to £722.9 million, while total brand sales lifted 2.6 per cent year-on-year to £4.2 billion.

Next’s online division continued to experience rapid growth, booking a 14.7 per cent year-on-year increase in sales to £1.91 billion and a 13.8 per cent uptick in profits to £352.6 million.

However, the fashion retailer’s physical store sales tumbled by 7.9 per cent year-on-year to £1.95 billion while profits slumped 21 per cent to £212.3 million.

Next said that as the high street remains under pressure, omnichannel integration, management and reduction of retail costs, renegotiation of leases or relocation and closures of stores would become priorities in minimising further retail losses.

It added that its online business would increasingly boost overall sales and profits, and because of its it plans to improve the functionality of its website as well as obtain access to stock in its partners’ warehouses so as to allow online orders to be fulfilled from those warehouses.

For the financial year ahead, Next said it expected profits to “marginally” decline by around 1.1 per cent to £715 million, despite forecasting higher sales thanks to the better online outlook.

Chief executive Lord Simon Wolfson added that despite ongoing Brexit worries, the company saw “no evidence that this uncertainty is affecting consumer behaviour in our sector”.

“Our feeling is that there is a level of fatigue around the subject that leaves consumers numb to the daily swings in the political debate,” he said.

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