Subsequent is ready to rake in report income after a bumper Christmas triggered a fifth improve to its forecasts in ten months.
Following booming demand for get together clothes and fits over the festive interval, the FTSE 100 clothes chain mentioned it now expects to make income of £822million within the 12 months to late January.
That might be 9.8 per cent above pre-pandemic ranges and greater than 20 per cent greater than the £670million it pencilled firstly of the yr.
Merry Xmas: Clothes chain Subsequent mentioned it expects to make income of £822m within the 12 months to late January following booming demand for get together clothes and fits over the festive interval
It got here after Subsequent loved a stonking Christmas with gross sales within the eight weeks to December 25 up 20 per cent on the identical interval in 2019 earlier than Covid struck.
The enterprise was boosted by gross sales of partywear, as buyers hoping for a extra sociable festive season determined to refresh their wardrobes.
Gross sales over the interval have been £70million greater than it had predicted just some months in the past. The Excessive Avenue stalwart additionally pencilled in income of £860million for the yr forward – up 4.6 per cent.
Analysts branded Subsequent the ‘jewel within the Excessive Avenue’s crown’.
All eyes will now be on its rival Marks & Spencer, which is able to unveil its buying and selling replace subsequent week after launching a shake-up of its clothes division.
Regardless of the dazzling efficiency, Subsequent warned of issues in its supply service as a result of an absence of workers. And it voiced considerations over inflation as the price of supplies, workers and freight soar.
Why Lord Wolfson is retail royalty
Easy method: Lord Wolfson
By RUTH SUNDERLAND
So what’s the secret of Subsequent’s success? The key, paradoxically, is that there is no such thing as a secret.
Subsequent is good as a result of it does the fundamentals of retail actually, rather well. Lord Wolfson, its boss, sells merchandise folks need, at a value they’re completely happy to pay.
All of the nitty gritty, from inventory management to managing returns, is watched like a hawk.
It sounds easy, however it’s simpler to say than to do – simply ask Subsequent’s rivals who get it mistaken.
Different elements within the recipe embrace early funding in digital, which started again in 1999 and proved its value through the Covid lockdowns.
However the bodily shops stay an integral a part of the combo, so clients can pop in to strive issues on, choose up clothes purchased on-line and produce again undesirable objects.
Subsequent gives a platform for different manufacturers and takes stakes in them, as an example in Reiss, the place it has a 25 per cent holding.
Wolfson’s easy method even extends to its monetary studies. At most firms, these are splattered with company gobbledegook.
Subsequent’s are a mannequin of plain English – at all times an indication of a agency comfy with its enterprise mannequin and nothing to cover. Because of this Wolfson is retail royalty.
It mentioned wages alone have been anticipated to rise 5.4 per cent over the following yr, pushed by a rise within the nationwide residing wage and shortages of warehouse and know-how workers.
It mentioned costs of its items would most likely be 3.7 per cent greater in spring and summer time than a yr earlier, rising to six per cent subsequent autumn and winter.
Subsequent chief govt Lord Wolfson mentioned: ‘The important thing stage of uncertainty is the inflationary surroundings.
I’ve been in enterprise for 30 years and I don’t suppose I’ve ever been by one other interval of economy-wide inflation on this scale.’
He added: ‘How effectively we fare in that surroundings is troublesome to see.’ Traders appeared to take the warning to coronary heart, as shares fell by 3.4 per cent, or 268p, to 7770p regardless of the upbeat outcomes.
Even the promise of a 160p-per-share particular dividend, including as much as a complete of £205million, did little to buoy sentiment.
Subsequent is likely one of the few retailers with a bricks-and-mortar presence on the Excessive Avenue which has carried out effectively through the pandemic.
A part of this is because of on-line innovation permitting clients to nonetheless store when shops have been pressured to shut.
Subsequent has additionally partnered with third-party manufacturers, corresponding to Victoria’s Secret, Hole and Reiss, to promote their garments on its platform.
Sophie Lund-Yates, fairness analyst at Hargreaves Lansdown, described Subsequent because the ‘jewel within the Excessive Avenue’s crown’. She mentioned: ‘There aren’t many bricks-and-mortar retailers doling out particular dividends or upgrading steering a number of instances over.’