Next set to deliver bumper profits despite the squeeze on consumer spending

15 March 2024 , 15:56

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Next is expected to reveal higher profits next week (Image: PA Archive/PA Images)

Next is expected to report higher profits for the past year despite the squeeze on spending on consumer goods.

The fashion chain's shares are near record highs because it has outperformed market expectations against a challenging backdrop. On Thursday, March 21, Next is likely to announce that its pre-tax profits have gone up by 4% to £905 million for the year ending in January.

Shareholders are hopeful that Next will do even better than predicted, as it has done several times over the past year. The company is also expected to say that its sales for the full year have grown about 4% compared to the previous year, reaching around £4.78 billion.

Guy Lawson-Johns, an equity analyst at Hargreaves Lansdown, said: "Next gave investors plenty to be happy about in their last update, with growth of 9.1% in its online channel helping sales to exceed group forecasts.

"While it may be winning the online race, the retail sector remains a tough place to operate. And with a history of under-promising and over-delivering, markets have come to have high expectations."

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Next has also had to deal with recent challenges like delays in getting goods through the Red Sea, which has put pressure on its supply chain. Investors are eager to learn how this has affected the stock after Next's bosses warned in January that some products were being delayed. Shareholders are also keen to hear more about the group's investment and acquisition strategy, having recently completed several deals, including increasing its stake in rival Reiss.

"Analysts will look for an update on this deal, the purchase of FatFace, the ongoing integration of Joules and any further merger and acquisition activity," said Danni Hewson, AJ Bell head of financial analysis. He added: "The development of Next's Total Platform, where other brands can use its online services for themselves, should also be interesting the operation made gross sales of £162 million and profit for Next of £55 million in the 12 months to January 2023."

Lawrence Matheson