Next Plc with a strong fourth quarter, raises profit forecast

As the Financial times reported earlier today, Next Plc raised its forecast for full-year profits. The U.K. fashion chain proclaimed itself as a winner of the Christmas shopping season.

The last holiday trading period was quite difficult for retailers, especially considering the fact that most stores made heavy discounts in order to meet the customers expectations. As reported by Financial Times earlier today, Debenhams Christmas trading period featured a profit warning and culminated on Thursday with the departure of Simon Herrick, who is the companys Finance Director.

Next Plc kept its policy of never discounting the assortment before Christmas holidays but it surprisingly made a great breakthrough on Friday with fourth quarter sales, which were estimated as “significantly ahead” of its own forecasts. The company announced that its total sales from November to Christmas Eve 2013 are 11.9% up, compared to the same period in 2012. The Internet and mail-order division of the company – Next Directory recorded sales, which were 21% up compared to the sales a year ago.

Next Plc has about 540 stores in the U.K. Its bricks and mortar sales rose 7.7% in this period of seven weeks in comparison to the same period in 2012. Judging from the fact that it had quite a strong fourth quarter and its total sales rose 5% in the year-to-date, the company now expects to gain pre-tax profit for the year until the end of January 2014. The pre-tax profit is estimated to 684-700 million pounds, which means a rise of at least 10% compared to the last years profit.

All this proves that the fashion chain has been having a strong performance recently. Next Plc is expected to become more focused on the competition with one of its most serious rivals – the retailer Marks and Spencer. The latter announced that it plans to update its investors next week on the matters, which are considered to have been a “challenging seasonal trading period”, including a 30%-sale on all clothing the weekend before Christmas, as reported by the Financial Times.

According to the Financial Times, the current share price of Next Plc is 9.04% up, and it one-year return rate is 55.69% up. The 21 analysts offering 12 month price targets for Next Plc have a median target of 5,380, with a high estimate of 6,400 and a low estimate of 3,760. The median estimate represents a -2.71% decrease from the last price of 5,530.