Careful Next steps

Finance director David Keens says he expects sales to climb by 1.5-5.5 per cent in the coming year, compared with an earlier estimated range of 2.5-7.5 per cent. Management expects profits of around £810m, compared with previous consensus forecasts of £828m. There are two reasons for the more conservative outlook. Some clothing collections have not been popular, and the first half faces tough comparatives: last year's balmy spring and summer boosted sales significantly.

But Next is also trying to stem the outflow of credit customers from its directory business. Numbers fell 3 per cent last year as consumers increasingly opted to use their own credit and debit cards when they shopped online. Mr Keens says the shortfall was being more than offset by higher cash customers - whose numbers grew 42 per cent in the year - and that the difference in profitability between cash and credit customers had narrowed to 2.4 per cent. Nevertheless, Next plans to promote its credit offering this year in an effort to maintain the customer base.

Last year was also a tale of two halves: brand sales at the start of the year grew 11 per cent, while second-half trading weakened to 'just' 5 per cent growth. Over the full year, retail sales rose 5 per cent to £2.4bn, while directory sales increased by 12 per cent to £1.5bn.

The economy is improving and wages have started to rise in real terms, but Mr Keens says this has not yet filtered down to higher spending on clothes. "There's lots of uncertainty, but the business is in good shape," he says, adding that shareholders could expect a cash return of £360m this year, either through share buybacks or special dividends.

Investec has left forecasts for the current financial year unchanged: pre-tax profit of £834m and EPS of 413p, up from £780m and 387p in 2014.