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UK retail bellwether Next is planning to target wealthier shoppers as consumers increasingly buy “fewer, better quality” items, its chief executive said, as the company raised its annual profit forecast to nearly £1bn.
Next, which has 458 stores in the UK, is launching a separate website for third-party brands such as APC, which sells clothing that costs hundreds rather than tens of pounds, as well as Ganni, Joseph and Rixo.
Chief executive Lord Simon Wolfson told reporters on Thursday that over the past 18 months “we’re definitely seeing more traction at the mid and higher end of our price [ranges] than at the base, and I think that people are buying fewer, better quality things”.
He added that of Next’s 8mn online customers “there is a significant number . . . interested in more premium products”.
The initiative comes as the FTSE 100 company upgraded its pre-tax profit forecast for the year by £15mn to £995mn — an increase of 8.4 per cent on the previous year’s result.
Next had already upgraded its annual guidance to £980mn in August, from £960mn, in contrast to rivals including Primark, which recently warned that UK like-for-like sales would fall in its second half because of bad weather hitting demand.
Wolfson said Next had shown over the years a consistent “ability to weather the storm” and sell the right products across the right platforms, as well as “rigorous financial discipline”.
Next is widely acknowledged as having adapted deftly to major changes such as the shift to online shopping, while other well-known names have disappeared from the high street.
The group is also hoping to expand overseas, with international online sales up 23 per cent to £433mn in the first half of the year.
Overall full-price sales in the first six weeks of the second half beat expectations, rising by 6.9 per cent, following strong trading in the first half, Next said on Thursday.
In the six months to July, full-price sales were up 4.4 per cent, with pre-tax profits rising by 7.1 per cent to £452mn. Total group sales rose 8 per cent to £2.9bn.
Shares rose 3 per cent in morning trading. The company has a market capitalisation of just over £13bn.
In its results, the company warned it could close stores after it lost an equal pay legal case last month, which it intends to appeal.
Clive Black, head of consumer research at Shore Capital, said: “Despite a challenging backdrop in the UK for consumer goods including apparel, [Next] has cleverly set expectations over a sustained period of time that means it at least meets and more often than not exceeds expectations.
“That sense of control, downside resilience, boosted by more often than not small beats, underpins the stock market’s move from affection to love for Next’s equity.”
