Next's (NXT) shares rose by 8 per cent after the retailer announced that it now expects to record a small full-year profit of £195m, versus starker forecasts earlier this year that included projections of a sales wipeout exceeding £1bn.
Sales fell 28 per cent over Next’s second quarter to 25 July, compared with an April forecast of a 30 to 40 per cent decline. Having closed its warehouses in March, the company said that this performance was “much better than we expected”, and attributable to a resurgence in store demand and the recovery of warehouse capacity. Retail store sales fell 32 per cent over the period, while online sales rose 9 per cent.
Next has laid out a tranche of new scenarios for its full year. The central model assumes a second-half sales decline of 19 per cent, leading to an overall drop of around a quarter. Net debt would fall by £460m to £650m. Should a second coronavirus wave take place and another lockdown occur, Next expects its second-half sales to fall by a third, with implied pre-tax profits of £15m for the year.
