Next reports ‘record high’ revenue, prepares for overseas growth

British retailer Next issued its full year results for 2023, during which it saw “record high” pre-tax profits rising 5 percent to 918 million pounds, three million pounds above the guidance given in January.

The uptick was largely led by online sales, which saw profits rise 11 percent compared to retail’s 4 percent growth. The company's operating profit, meanwhile, hit 996 million pounds, reflecting a 5.2 percent increase.

Next’s pre-tax earnings per share (EPS) for the period rose from 704.8 pence to 757.2 pence, a 7.4 percent uptick, while its statutory profit hit 1.016 billion pounds, due to an accounting gain from its Reiss acquisition carried out last year.

This wasn’t the only impact from third-party brands snapped up by Next in recent years. In the report, the company said that FatFace, for which it had acquired a 97 percent equity stake in towards the end of 2023, incurred 3.2 million pounds of non-trading costs as part of its plan to introduce the brand to its Total Platform offer by September 2024.

For Joules, meanwhile, non-recurring costs incurred by the group came to 9.1 million pounds due to the acceleration of introducing the brand to its Total Enterprise Platform.

In Next’s franchise and wholesale division, profits fell by 1.2 million pounds to 5.8 million pounds, a drop caused by lower franchise sales in the Middle East and the closure of franchise operations in Japan, New Zealand and Greece. Despite this, for the year ahead, the company is expecting its total profit in the category to increase to eight million pounds.

For 2024, profit forecast to increase 4.6 percent

For the company as a whole, Next is forecasting full-price sales to grow a further 2.5 percent while its group sales, including subsidiaries, are expected to increase 6 percent.

The group set its profit guidance to 960 million pounds, up 4.6 percent, while its post-tax EPS is forecast to come to 606.3 pence, an increase of 4.8 percent.

In the report, Next said: “In many ways we emerge from these turbulent years a very different company. We have quietly reinvented Next plc, reshaping and restructuring the group and emerging with new avenues of growth.

“However, the two capabilities that ultimately power the business remain unchanged: the ability to develop outstanding product ranges, and the creation of highly effective infrastructure to sell and distribute that product.”

In its sights are new avenues of growth, it added, including growing the Next brand overseas and developing new brands and licences alongside targeting increased revenues from its Total Platform service.

Next’s online overseas business has already seen “good progress”, with sales up 17 percent and net margins further improving from 8.6 percent to 13 percent, increases that came due to improved full price sales with third-party aggregators and increased spending on digital marketing.