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Next shares rise on upbeat full-year profit outlook
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Published Sep 19, 2024 03:34AM ET
© Reuters.
Investing.com -- Shares of Next PLC (OTC:NXGPY) (LON:NXT) jumped on Thursday as the retailer's positive outlook for full-year profits overshadowed mixed first-half results.
At 3:34 am (0734 GMT), Next was trading 3.2% higher at £10,670.
The company revised its profit before tax (PBT) guidance for FY25 to £995 million, up from an earlier forecast of £980 million.
This adjustment comes in line with RBC Capital Markets' projection of £1,002 million. The results in the first half were mixed, but certain divisions exceeded expectations, which contributed to the stronger forecast.
Total sales for the half-year was at £2.9 billion, slightly ahead of the £2.8 billion consensus estimate from RBC.
Profits were also above target, with underlying PBT reported at £452 million, surpassing the predicted £441 million.
Next's earnings per share came in at 282.8p, outperforming RBC’s expectations of 269.1p.
Among the different business segments, retail sales reported £867 million in revenue, higher than the expected £853 million.
Retail EBIT followed suit, at £98 million compared to a forecast of £95 million.
Online sales were another key highlight, generating £1.6 billion, marginally above the projected £1.5 billion.
The online division's EBIT, at £265 million, came in as expected. The finance division delivered £150 million in sales, with EBIT at £97 million, comfortably exceeding RBC’s estimate of £84 million.
However, Total Platform, a business supporting other brands through logistics and technology, fell short of forecasts, reporting £23 million in profits.
“Full price sales growth for the first 6 weeks of Q3 is up +6.9% yoy ahead of our +4% yoy estimate,” said analysts at RBC.
This led Next to revise its sales growth forecast for H2, now targeting a 3.7% year-on-year increase, up from the previous estimate of 2.5%.
RBC analysts believe that Next’s omnichannel strength and efficient logistics network will continue to be major assets as the retailer navigates the challenging retail environment.
“It (Next) has potential to develop its high-return Total Platform business for other brands, to leverage its strong systems and online warehousing and distribution. However, this is likely to add complexity to the business and will bring with it some M&A risk,” RBC said.
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