// Next reports a rise of 19% in full price sales in the last 11 weeks compared with two years ago
// The retailer is set to pay special dividends following the news
// It also agrees to repay £29m in business rates holiday relief
Next has upgraded its annual profit guidance and said it would pay special dividends, after enjoying a stronger-than-expected sales performance so far in the second quarter.
The soaring sales also prompted the fashion retailer to agree to repay part of the savings it made from the government’s business rates holiday.
Next said it had soundly beaten its expectations for full-price sales, with a rise of 18.6 per cent in the last 11 weeks compared with two years ago, and as a result it was increasing its profit guidance.
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Pre-tax profits for the year are now expected to hit £750 million – an increase of £30 million on previous expectations.
Despite the strong overall sales, business in Next’s physical stores remains subdued, with sales down six per cent in the 11 weeks to July 17 compared with the same period in 2019.
This was more than offset by strong growth online – up 44 per cent over the same period compared with two years earlier.
Its online fashion label business – selling third-party brands – was the strongest subsection, up 65 per cent in the quarter, while its own-brand clothes sales rose 28 per cent. Overseas sales were up 61 per cent.
Next put the sales surge down to a combination of pent-up demand for adult clothing, the onset of warm weather at the end of May and the beginning of June, and an increase in spending due to consumers saving while in lockdown and fewer holidays abroad.
The retailer, which already has a track record of beating guidance, said it expected sales for the second half of year to January 2022 to rise by six per cent rather than three per cent.
Next said the increase in profit guidance would have been higher had it not decided to repay £29 million of business rates relief, accounting for the time its shops were open.
Next, which has a well-established online operation and store network, said its surplus cash for the year was forecast to be £240 million, it is set to be distributed to shareholders through special dividends during the current financial year, the first to be paid in September.