Next is on the brink of a £1bn annual profit, driven by robust international sales.
- An 8% sales increase was noted in the first half of 2024, amounting to £2.9bn.
- Overseas markets, particularly Europe and the US, showed exceptional growth.
- Next is expanding its premium and affordable luxury offerings to cater to aspirational consumers.
- There are cautious store closure warnings amidst legal challenges on equal pay.
Next is projected to achieve a remarkable £1bn profit this year, bolstered by unexpected sales growth in Europe and the premium fashion sector. CEO Lord Simon Wolfson highlighted this trajectory at a press briefing following the release of the interim financial results.
The company’s reported sales grew by 8% to £2.9bn in the first six months of 2024, with pre-tax profits rising by 7.1% to reach £452m. Consequently, Next adjusted its full-year pre-tax profit forecast, increasing it by £15m to a total of £995m.
Overseas sales surpassed expectations, contributing over £120m of the full-year profit, with a notable £433m in full price sales achieved in the six months leading to July. Wolfson emphasised the significant opportunities present in international markets, especially in mainland Europe, where half-year sales surged by 38% to £206m.
The US market also showed promise, evident in their childrenswear line sold through Nordstrom, which saw a 67% increase in sales to £8m for the half-year. There’s an intent to broaden product categories sold stateside, although specifics remain undisclosed.
Domestically, UK sales saw only a 1% increase. Wolfson admitted that growth opportunities in the UK are limited to licenses, third-party brands, and the Next Total Platform, which provides IT, warehousing, and distribution infrastructure for e-commerce operations.
Next is capitalising on the premium and ‘affordable luxury’ sectors to better appeal to aspirational consumers. The company increased its investment in premium brand Reiss and plans to launch a platform for third-party brands ahead of the Christmas season. Brands such as APC, Ganni, and Marc Jacobs are part of this upcoming trial.
Despite acquisitions of high-street retailers like Joules and Fat Face, Next has maintained caution, focusing on strategic investments such as increasing its stake in Reiss and acquiring shares in Rockett St George.
Wolfson addressed the recent equal pay legal battle, affecting 3,540 current and former employees. There is a possibility of store closures, dependent on profitability, although Wolfson clarified this is not a threat but a business decision contingent on the viability of stores.
Next plc is strategically positioned for significant growth, leveraging international markets and premium offerings, whilst navigating domestic challenges.
