Steep Decline in Shares by 6% due to Retailer's reveal of sharper-than-expected UK Sales Decrease
Next Anticipates Slower Growth in UK Sales, Focuses on Digital Transformation
In a recent announcement, retail giant Next has predicted a significant slowdown in full-price UK sales for the latter half of the year, with growth in the core market cooling to 1.9%. Despite this forecast, the company's total revenues for the first half of the year have seen a substantial increase of 10.3%, reaching £3.2 billion.
The company's store-sourced sales are expected to decline 0.6% in the second half, but Next is looking to the future with a strategic focus on enhancing its online operations and expanding its international presence. This strategy includes the implementation of data-driven, agile, and hyper-localized digital marketing techniques, as well as the use of immersive AI-powered technologies and predictive personalization to engage consumers effectively in competitive markets.
The first half of the year saw corresponding turnover in the core UK market rise by 6%, with online and in-store sales increasing by 7% and 5% respectively. Next's UK total online sales rose by 11.1% year over year, amounting to £1.3 billion. Store-generated sales in the UK also saw growth, rising by 3.7% to £899 million.
Next's share price currently stands at £112.80 per share, a 6% decrease from the previous day. However, the company's full-year pre-tax profit estimates remain unchanged, at £1.1 billion. Pre-tax profits for the first half of the year increased by 13.8% to £515 million.
Dan Lane, an analyst at Robinhood, has commented on Next's ability to adapt and strategically benefit from the online retail sector. He notes that while fast fashion brands have risen and fallen, Next has nurtured its brand portfolio, online platform, and customer base steadily. Lane further emphasizes the importance of bolstering ex-UK operations and international awareness due to the predicted drop in UK sales in the second half.
Next's brand sales were especially strong overseas, rising by 20% compared to the same period in 2024. The company makes approximately 80% of its group turnover from the UK, but with its strategic focus on digital transformation and international expansion, it aims to diversify its revenue streams and mitigate the impact of potential slowdowns in the UK market.
Looking ahead, Next predicts annual growth of 9.3%, with total full-price sales expected to rise 4.5% in the second half and 7.5% over the full year. The company's revenues for the 12 months are forecast at £5.4 billion. With its strategic vision and adaptable approach, Next continues to navigate the dynamic retail landscape with resilience and ambition.
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