“At our central guidance of full price sales growth of 1.7%, we estimate that group profit before tax would be around £715m, down 1.1% on last year.”
Next boss says customers may gain from lower tariffs
Next saw a slight dip in profits
Next chief executive Lord Simon Wolfson, said customers could benefit from price cuts at its stores as a results of Brexit tariff changes.
“There is still a great deal of uncertainty around the exact shape and form of the UK’s future relationship with the EU. We can see no evidence that this uncertainty is affecting consumer behaviour in our sector,” he said in a statement with the company’s results.
“Our feeling is that there is a level of fatigue around the subject that leaves consumers numb to the daily swings in the political debate.”
On preparations for Brexit, he says the business has “little reliance on Dover or Calais”.
“Nonetheless we have put in place contingency plans to route more stock through alternative, lower risk, ports of entry if needed”.
The government’s proposed tariff regime would lead to net reduction in the tariffs of around £12m to £15m because the proposed reductions in tariffs from countries outside the EU would be more than offset by any increase in tariffs on goods we currently source from the EU and Turkey.
“In the medium term, our intention would be to pass on cost price improvements to customers, in the form of better pricing. In the context of £1.7bn of stock purchases, the savings would be relatively modest”.
Full-year profits fell by 0.4% to £722.9 to £726.1m.
Lord Wolfon said Next was maintaining its guidance issued for the full year in January’s trading statement.
The fashion retailer, hit by the hugging controversy, reported a 26.1% fall in pre-tax profits to £50.9m for the 52 weeks ended 26 January, against £68.8m in the previous year.
Group revenue rose 4.4% to £617.4m, while retail sales were up 4.2% to £461m. Online sales rose 20.4% to £121.7m.
“Ted Baker has continued to grow across each of the brand’s distribution channels despite difficult trading conditions across a number of the Group’s global markets,” said acting chief executive Lindsay Page.
“This resilient sales performance again reflects the strength of the brand, the talent of our teams, and the quality of our collections.”