Closure of Websites in Ukraine and Russia Cause £10m Profit Reduction
- £85m sales loss due to closures in Ukraine and Russia
- Profit before tax increased 140% year-on-year from £342.4m to £823m in FY22
- Operating profit up 103.7% year-on-year to £905.4m
- Total group sales grew 34.1% year-on-year to £4.86bn
- Online sales increased 31.1% to £3.1bn, retail sales up 50.1% to £1.43bn
- UK retail sales estimate increased by £78m due to better performance in stores
- Reduced UK online sales expectations by £33m due to strong store sales
- Next Platform launched four new clients, delivering £10m profit so far
- UK sales ahead of expectations, driven by retail store performance
Next has announced a £85m sales drop for the financial year 2022/23 due to the closure of its websites in Ukraine and Russia. The company also revealed that profit guidance has been lowered by 1.2% following a loss of £18m. However, profit before tax increased 140% year-on-year from £342.4m to £823m in the 12 months to January 2022 (FY22), which is up 10% compared to pre-Covid levels in 2019/20 (FY20). Operating profit spiked 103.7% year-on-year from £444.5m to £905.4m. Total group sales grew 34.1% year-on-year from £3.62bn to £4.86bn, and brand full price sales increased 32.4% to £4.26bn compared to FY21. Online sales grew 31.1% to £3.1bn compared to £2.36bn in FY20, while retail sales surged 50.1% to £1.43bn, although this fell 22.7% to £1.85bn compared to FY20 levels. Next increased its UK retail sales estimate by £78m due to better-than-expected store performance and reduced its expectations for UK online sales by £33m due to stronger-than-anticipated sales in stores, including a £7m drop in Label sales and a £26m drop from the Next Brand sales. In the first quarter of FY22, online sales grew in homeware and children’s clothing during lockdown. The company also launched four new clients on Total Platform, delivering a year one profit of £10m and expected to deliver around £20m in the year ahead. Next said: ‘So far this year, UK sales are ahead of where we expected them to be, mainly driven by better-than-anticipated sales in our retail stores. We are also seeing a very sharp reversal of lockdown fashion trends, with a return to more formal dressing and notable reduction in spending on Home and very casual clothing.’
Factuality Level: 8
Factuality Justification: The article provides accurate information about Next’s sales guidance for the financial year 2022/23 and its reasons behind the lowering, as well as details on profit before tax, operating profit, total group sales, online and retail sales, and UK sales. It also mentions the company’s expectations for UK online sales and new clients on Total Platform. The article is mostly factual with a slight speculation about future economic conditions.
Noise Level: 3
Noise Justification: The article provides relevant information about Next’s sales guidance adjustments due to the closure of its websites in Ukraine and Russia, as well as its financial performance for FY22 compared to previous years. It also mentions the growth in online sales and the launch of new clients on Total Platform. The justification is that it offers useful insights into the company’s performance and future expectations, but does not delve too deeply into broader economic or societal implications.
Financial Relevance: Yes
Financial Markets Impacted: Next’s stock price may be impacted by the lowered sales and profit guidance, as well as the performance of its retail stores and online sales.
Financial Rating Justification: The article discusses changes in Next’s financial performance, including lowered sales and profit guidance, growth in various areas of their business, and factors affecting future predictions. This information is relevant to investors and financial markets interested in the company’s stock performance.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: No extreme event mentioned in the text.
www.retailsector.co.uk