TIDMNXT
RNS Number : 6964X
Next PLC
06 May 2021
Date: Embargoed until 07.00hrs, Thursday 6 May 2021
Contacts: Amanda James, Group Finance Director (analyst calls)
NEXT PLC Tel: 0333 777 8888
Alistair Mackinnon-Musson Email: next@rowbellpr.com
Rowbell PR Tel: 020 7717 5239
Photographs: http://www.nextplc.co.uk/media/image-gallery/campaign-images
NEXT PLC
Trading Statement - 6 May 2021
HEADLINES
-- Full price sales in the thirteen weeks to 1 May were down
-1.5% on two(1) years ago. Our previous central guidance assumed
that Q1 would be down -10% and we have beaten this Q1 forecast by
GBP75m.
-- We have increased our central guidance for full year profit
before tax by +GBP20m to GBP720m(2) .
-- This profit upgrade accounts for the GBP75m sales
over-achievement in Q1. We have not raised our sales guidance for
the rest of the year, which remains at +3% against two years
ago.
(1.) Sales comparisons in this Trading Statement are given
relative to two years ago (2019/20) as we believe this is more
meaningful than comparing with 2020/21, which was affected by
COVID.
(2.) Profit before tax estimates presented in this document
exclude the impact of IFRS 16 Leases.
FULL PRICE SALES PERFORMANCE BY BUSINESS CHANNEL
Full price sales (VAT exclusive) versus
2019 Thirteen weeks to 1 May
========================================== =======================
Online NEXT UK +63%
Online LABEL UK +71%
Online Overseas +67%
Total Online +65%
Retail (UK and Ireland) - 76%
=======================
Total Product full price sales - 0.6%
Finance interest income - 12%
=======================
Total full price sales including interest
income - 1.5%
Full Price Sales by Week
The chart below shows full price sales by week and by sales
channel. Finance interest income is shown in grey, Retail sales in
green and Online product sales in blue. The dotted black line shows
the total full price sales for 2019. The percentage variance
against two years ago is shown at the top of each bar. Almost all
of our Retail stores were closed for the first ten weeks of the
quarter with the majority reopening on 12 April. The strong sales
growth we have experienced in the last three weeks is due to
pent-up demand built up over the last three months and is very
unlikely to be indicative of demand for the rest of the year.
Full Price Sales by Week chart: Click or paste the following
link into your web browser to view the PDF document. Refer to page
2 for the relevant chart.
http://www.rns-pdf.londonstockexchange.com/rns/6964X_1-2021-5-5.pdf
Product Full Price Sales Performance - Analysis and
Explanation
Overall full price product sales (excluding interest income)
were only down -0.6% despite the ten-week closure of our Retail
stores. The number makes it appear as if almost all the sales we
lost in stores were simply transferred Online. This was not the
case. In fact, very few of the Retail sales lost on adult clothing
were recovered Online.
In reality, it was the growth in Online sales of NEXT Homeware,
third-party brands (through LABEL) and NEXT Childrenswear, along
with increasing sales Overseas, that served to make up for the
sales we lost in our stores. The performance by category is clearly
explained in the table below, which sets out the variance in total
full price sales (i.e. Retail and Online added together) by product
category and geography.
Full price
Full price sales
Total full price sales by product category sales GBPm versus
(Retail and Online added together) % versus 2019 2019
========================================== ============== ============
UK NEXT-branded Adult clothing - 46% - GBP150m
UK NEXT-branded Childrenswear +2% +GBP3m
UK NEXT-branded Home +12% +GBP17m
============== ============
UK NEXT brand - 22% - GBP130m
UK LABEL third-party brands (including
Lipsy sold in stores) +67% +GBP64m
============== ============
TOTAL UK full price sales - 9% - GBP66m
Overseas Online +67% +GBP77m
Overseas Retail (Republic of Ireland) - 100% - GBP16m
============== ============
Total full price product sales - 0.6% - GBP5m
Post Lockdown Sales in Retail and Online
In the last three weeks sales have been exceptionally strong
and, versus two years ago, total full price sales were up +19%. In
that period, full price sales in like-for-like Retail stores were
up +2% and Online sales were up +52%.
Sales Expectations for the Rest of the Year
Evidence from last year suggests that this post lockdown surge
will be short lived, and we expect sales to settle back down to our
guidance levels within the next few weeks. We are therefore
maintaining our sales guidance for full price sales for the rest of
the year to be up +3% versus 2019. Within this guidance, we have
maintained the assumption that Retail will be down -20% and Online
will be up +24%(3) .
(3.) I n the guidance issued with our Full Year Results on 1
April we forecast Online full price sales for the full year to be
up +31%. This guidance assumed Q1 would be up +52% and the rest of
the year would be up +24%.
Finance Interest Income
Interest income was down -12% in Q1 and in line with our
expectations. We are maintaining our forecast for the full year to
be down -8%. The reduction in interest income is due to the lower
customer receivables balance, which reduced last year during the
pandemic as a result of lower credit sales and strong payments.
Full details of the Finance business outlook were given in the Full
Year Results issued on 1 April.
FULL PRICE SALES AND PROFIT GUIDANCE
Full price sales to date have been GBP75m better than expected,
adding around GBP20m of additional profit to our forecast. We are
therefore increasing our central guidance for profit before tax
from GBP700m to GBP720m. Our revised central, upside and downside
scenarios for full price sales and profit before tax are set out
below.
Downside Central Upside
scenario scenario scenario
================================= ========= ========= =========
Q1 full price sales versus
2019/20 - 1.5% - 1.5% - 1.5%
Rest of year full price sales
versus 2019/20 +0.0% +3.0% +7.0%
========= ========= =========
Full year full price sales
versus 2019/20 - 0.4% +1.9% +5.0%
Profit before tax GBP680m GBP720m GBP755m
Profit before tax versus 2019/20 - 6.7% - 1.2% +3.6%
========= ========= =========
SECOND QUARTER TRADING STATEMENT
Our next sales update will cover the first 26 weeks of the year
to 31 July 2021, and is scheduled for Wednesday 4 August 2021.
Forward Looking Statements
Certain statements in this Trading Update are forward looking
statements. These statements may contain the words "anticipate",
"believe", "intend", "aim", "expects", "will", or words of similar
meaning. By their nature, forward looking statements involve risks,
uncertainties or assumptions that could cause actual results or
events to differ materially from those expressed or implied by
those statements. As such, undue reliance should not be placed on
forward looking statements. Except as required by applicable law or
regulation, NEXT plc disclaims any obligation or undertaking to
update these statements to reflect events occurring after the date
these statements were published.
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END
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