LONDON BRIEFING: Next Raises Profit Forecast But Sees Sales Down 12%

(Alliance News) - UK clothing and homewares retailer Next on Thursday raised its full-year profit ...

Alliance News 17 September, 2020 | 8:07AM
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(Alliance News) - UK clothing and homewares retailer Next on Thursday raised its full-year profit guidance as it reported better-than-anticipated sales since the re-opening of stores.

Revenue for the half-year to July 25 was GBP1.29 billion, a sharp drop from GBP2.01 billion a year ago. The firm swung to a pretax loss of GBP16.5 million from a profit of GBP327.4 million.

Pre-IFRS 16, an accounting rule related to leases, Next posted a pretax profit of GBP9.0 million, dropping from GBP319.6 million a year prior.

Full price sales in the period were down a third on last year, though Next noted that sales in the last seven weeks have been up 4% on a year ago. In the last thirteen weeks, since stores reopened, brand full price sales have "been much better" than anticipated, down 2% on last year.

"Unfortunately, we believe that recent sales are very unlikely to be indicative of our sales performance for the rest of the year," said Next, noting a boost from fewer people taking overseas holidays and recent cool weather.

For the rest of the year, full price sales are expected to be down 12%. Pretax profit is seen at GBP300 million, up from the central scenario of GBP195 million given in July's trading statement.

Next shares were up 2.0% early Thursday.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: down 1.2% at 6,006.56

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Hang Seng: down 1.6% at 24,333.38

Nikkei 225: closed down 0.7% at 23,319.37

DJIA: closed up 36.78 points, 0.1% at 28,032.38

S&P 500: closed down 15.71 points, 0.5%, at 3,385.49

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GBP: down at USD1.2954 (USD1.2996)

EUR: down at USD1.1769 (USD1.1843)

Gold: down at USD1,946.00 per ounce (USD1,969.00)

Oil (Brent): down at USD41.52 a barrel (USD41.90)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Thursday's Key Economic Events still to come

1200 BST UK Bank of England interest rate decision

1100 CEST EU harmonised consumer price index

1100 CEST EU construction output

0830 EDT US housing starts and building permits

0830 EDT US Philadelphia Fed business outlook survey

0830 EDT US initial jobless claims

1030 EDT US EIA weekly natural gas storage report

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UK Prime Minister Boris Johnson lost a senior law officer as he was forced into a compromise over controversial plans to break international law by overriding the Brexit Withdrawal Agreement. The government will table an amendment to the UK Internal Market Bill, giving MPs a vote before it can use powers which would breach the deal brokered with Brussels last year. Around 30 Tory rebels were thought to be preparing to vote for an amendment on Tuesday which would have required a Commons vote before the provisions in the Bill relating to Northern Ireland could come into force. Downing Street relented and announced in a joint statement with Conservative MPs Sir Bob Neill and Damian Green that it would seek to amend the Bill to require the Commons to vote before a minister can use the "notwithstanding" powers contained within it. Lord Keen of Elie, the advocate general, tendered his resignation to the prime minister on Wednesday morning. In his resignation letter, he said: "Over the past week I have found it increasingly difficult to reconcile what I consider to be my obligations as a Law Officer with your policy intentions with respect to the UKIM Bill."

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Hurricane Sally lumbered ashore near the Florida-Alabama line on Wednesday, killing at least one person, swamping homes and forcing the rescue of hundreds as it pushed inland. The death happened in Orange Beach, Alabama, according to Mayor Tony Kennon, who also told The Associated Press that one person was missing. Moving at just 3 mph, the storm made landfall at 4.45 am local time close to Gulf Shores, Alabama. Sally cast boats onto land or sank them at the dock, flattened palm trees, peeled away roofs, blew down signs and knocked out power to more than 540,000 homes and businesses.

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BROKER RATING CHANGES

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BARCLAYS RAISES COMPASS TO 'OVERWEIGHT' ('EQUAL WEIGHT') - TARGET 1,500 (1,050) PENCE

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JPMORGAN CUTS INFORMA TO 'NEUTRAL' ('OVERWEIGHT') - TARGET 389 (528) PENCE

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COMPANIES - FTSE 250

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Trainline said it outperformed its expectations for operating cost savings in the first half. Trainline said ticket sales were sharply lower over its first half, though did improve as the second quarter progressed. Revenue for the six months to August 31 was GBP31 million, just 24% of the prior level's level. The train and coach ticketing platform noted a tough first quarter, which saw net ticket sales at just 9% of the same period a year ago, but this stepped up to 30% in the second quarter and exited in August at 42%. Overall, net ticket sales for the first half amounted to GBP358 million, just 19% of the prior year's level. Over the first half of the year, Trainline said it outperformed its expectations for operating cost savings. Given this outperformance and the revenue generated over the period, the company expects to report an adjusted Ebitda loss for the period of between GBP14 million to GBP19 million.

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Contracts-for-difference trading provider IG Group said it performed "very strongly" in the first quarter. Net trading revenue of GBP209 million in the three months to August 31 was up 62% on a year ago, driven by continued high levels of trading activity from existing clients and a 50% rise in total active clients. "I am excited by the outstanding performance we delivered in the first quarter as we enter the second year of our three-year growth strategy. This was a great start to the year, and although there was some moderation from the exceptional performance in Q4, our first quarter results demonstrate IG's continued strength across the Core Markets, while also highlighting the growth potential in the Significant Opportunities," said Chief Executive June Felix.

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Oxford Biomedica reported a narrowed interim loss amid a busy first half. Revenue was up 6% to GBP34.0 million in the six months to June 30, while its pretax loss halved to GBP6.1 million from GBP12.1 million. Oxford Biomedica said it expects a stronger second half to the year and, in addition, its partnership with AstraZeneca on the pharmaceutical firm's potential Covid-19 vaccine is likely to boost revenue in the year in excess of GBP10 million subject to successful scale up and regulatory approval of the fourth bioprocessing suite within Oxbox. Operating Ebitda for the group is expected to be "in the low to mid-single digit million range" for the year on this basis.

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Thursday's Shareholder Meetings

IG Group Holdings

Real Estate Credit Investments

Begbies Traynor Group

Secured Income Fund - GM re managed wind-down

FIH Group

Ryanair Holdings

Trakm8 Holdings

FastForward Innovations

Hostelworld Group - GM re issue of bonus shares

Gresham House Strategic

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By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Next PLC 6,314.00 GBX 2.40 -
Compass Group PLC 1,202.00 GBX 0.08
Informa PLC 436.90 GBX 4.62 -

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Alliance News

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