Next shares hit record high

Next posted record revenues and profits for 2023. These figures, management admits were “much better” than it anticipated this time last year. Total group sales rose by 5.9% to £5.8 billion (£5.5 billion in 2022), while pre-tax profits increased by 4.4% to £908 million (from £870 million last year).

Next Trading full price sales also increased by 4%, while profit before tax came in at £918 million, which, as increase of 5%, was £3 million ahead of the company’s previous guidance given in January. This was thanks to better-than-anticipated stock clearance rates, according to management. Next also made a non-cash exceptional gain of £109 million on its acquisition of a majority stake in fashion retailer Reiss, which it excluded from its headline financial figures. The retailer also returned £177 million to investors through share buybacks last year.

“The Group has delivered its highest ever levels of revenue and profit,” Lord Simon Wolfson told investors. “Perhaps more encouragingly, we enter the financial year with new avenues of growth along with a cost base that feels under control.” Lord Wolfson also said that he believed consumer confidence is currently the highest it’s been for seven years.

The shares rose 5% on the day of results, rising a further 1% on Friday.

Next snaps up ailing retail brands

As well as Reiss, where it has increased its stake from 21% to 72%, Next has been buying up other struggling retail brands - purchasing a 97% stake in FatFace and the intellectual property of the Cath Kidson brand, which went into administration in 2020.

Indeed, it has sourced its new finance director thanks to the Reiss acquisition. Outgoing finance director Amanda James is retiring after 28 years at the company and nine in her current role and Jonathan Blanchard, previously chief financial officer and chief operating officer at Reiss, is to take over the reins.

In addition, it has also added other brands, such as MADE and JoJo Maman Bebe to its online platform.

Next: Upbeat earnings guidance for 2024

Meanwhile, in terms of earnings guidance for the new financial year, Next expects further growth. Management forecasts underlying full price sales growth of 2.5% and total group sales (including subsidiaries) to increase by 6.0%. Profits are expected to grow by 4.6% to almost £1 billion (£960 million) this year. However, Lord Wolfson said attacks on ships in the Red Sea are likely to hit its supply chains.

The shares have risen by 35% over the past 12 months and are trading at record highs at 9,192p. Nevertheless, Next remains a quality retail brand that is performing well in difficult economic times.

Past performance is not a guide to future performance.