Strong Overseas Sales Growth
British retailer Next raises full-year profit guidance despite expecting slower domestic sales growth.
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Key Points
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Next operates more than 800 stores in the U.K. and Ireland, including outlets for Reiss, Joules and FatFace, alongside its online business serving domestic and overseas customers.
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Management reported that total group sales rose 10.3%, full-price sales increased by just under 11% and earnings per share climbed 16.8%, with the EPS growth helped by share buybacks completed at the end of last year.
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Overseas sales jumped 28%, which management described as unexpectedly strong despite the absence of obvious external tailwinds, reinforcing the appeal of the NEXT proposition beyond the U.K.
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Next said its balance sheet had strengthened substantially: net debt fell by £180 million, net assets increased by £340 million, surplus cash rose by £87 million year on year and net cash flow increased by £141 million.
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The interim dividend was raised by 16%, and management indicated that the full-year dividend should grow broadly in line with earnings per share, pointing to continued shareholder-income growth if profit expansion continues.
British retailer Next raised its profit guidance for the fourth time this year, adding £12 million to reach £1.255 billion Yahoo Finance. The boost came after first-half profit jumped 10.5% and full-price sales climbed 7.7%, driven by hot weather that lifted U.K. demand. But the company expects domestic sales growth to slow sharply to just 2% in the second half as economic worries mount.
The bright spot is overseas. Next raised international sales guidance to 20.5% after seeing unexpected strength abroad Market Screener. Meanwhile, the board declared an interim dividend of 98 pence per share — a 16% raise — signaling confidence in the retailer's financial grip despite the U.K. slowdown ahead.
Overseas Sales Surge Past Expectations
International sales jumped 28% in the first half, far outpacing anything Next's management had predicted Market Screener. The Leicester-based retailer said the growth came with no obvious external tailwinds, surprising even the company itself. This strength abroad has prompted Next to lift its full-year international sales guidance to 20.5%, a significant boost from earlier forecasts.
U.K. Growth Faces Headwinds Into Second Half
Hot weather lifted first-half U.K. sales, but Next expects that tailwind to fade fast Market Screener. The company now guides for just 2% domestic sales growth in the second half as economic concerns weigh on British shoppers. Total group sales still rose 10.3%, and full-price sales climbed by just under 11%, but the pullback signal is clear.
Strong Balance Sheet and Cash Flow Support Dividends
Next's financial position strengthened substantially in the first half Yahoo Finance. Net debt fell £180 million, net assets rose £340 million, and surplus cash jumped £87 million year-on-year. Cash flow generation was robust, climbing £141 million. These gains allowed the board to raise the interim dividend by 16% to 98 pence per share and signal that full-year dividend growth should track earnings expansion if profit keeps rising.
Earnings Per Share Growth Fueled by Share Buybacks
Earnings per share climbed 16.8% even as profit growth ran slower at 10.5% Yahoo Finance. The outsize EPS gain came thanks to share buybacks completed late last year, which reduced the share count and boosted per-share metrics. Next operates over 800 stores across the U.K. and Ireland — including outlets for Reiss, Joules and FatFace — plus a strong online business serving customers at home and abroad.
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