Next Has Its First Profit Warning In The Past Decade

According to the World Clothing, Shoes and Hats Network, one of the largest clothing retailer Next PLC (NXT.L) In the 2016/17 fiscal year, the Group recorded its first profit decline after the 2008 financial crisis. The Group was also "extremely cautious" about the future and warned that the operation would remain difficult this year.
By the end of January 2017, the group's annual profit before tax had declined by 3.8% year on year, from 836.1 million pounds to 790.2 million pounds, but the decline was in line with the group's profit warning and market expectations in January this year. In addition, the annual dividend of 158p per share was also flat in the 2015/16 fiscal year, and the cash flow also remained strong, promoting Next PLC (NXT. L) jumped 9.6% to 4248p at most today.
The group expects that this year's pre tax profit will further decline to GBP 68-78 million, which means a decline of 1.3% - 13.9%. The group pointed out that the rise of the minimum wage in the UK and the "apprenticeship tax" levied from April this year have affected their profitability.
As the most successful clothing retailer in Britain this century, Next PLC faces Fast fashion Brand challenges have also been moderately reformed, but CEO Simon Wolfson Admitting that they made mistakes in product selection in the process of imitating fast fashion brands and deviated from the most popular and favorite products, he said that the group would return to basic products, but the change would not be obvious until the third quarter.
Simon Wolfson He also pointed out that under the background of weak growth in disposable income of residents, British consumer spending continued to shift from goods to experience. He thought it might be better to think about whether high street stores were assets or burdens now. Also released today, UK official data show that the decline of retail sales in the country from December 2016 to February 2017 was the largest in the past seven years.
Next PLC's 538 store retail network and the continuous decline in sales have worried analysts. Simon Wolfson He pointed out that it is still a feasible strategy to expand the sales area. The group still plans to increase the sales area of 150000 square feet and 250000 square feet respectively in the current fiscal year 2017/18 and the next fiscal year. He explained that although consumption has shifted from high street to online channels, retail profits have shrunk as a result, but the current risk is that retail efficiency is reduced, and their high street stores can still make money, The group's lease is shorter than most competitors, Simon Wolfson said they had the flexibility to close loss making stores.
In the whole 2016/17 fiscal year, the sales of Next PLC fell slightly by 0.2% year on year to 4136.8 million pounds, including Next Retail, which belongs to the physical store network Department sales decreased by 2.9% year-on-year to £ 2304.6 million, and directory and online sales business NEXT Directory increased by 4.2% to £ 1728.5 million Overall brand sales remained flat, but full price sales fell 1.3%.
The group's sales growth rate this year is expected to be - 4.5% to 1.5%, but the same store sales are expected to record a 7% decline. Simon Wolfson It even warned that there might be the worst case that sales would continue to fall back in the middle single digit range in the next 10 years.
In order to offset the pressure on profits caused by the devaluation of sterling and the increase of procurement costs, the group has raised the price of spring and summer series by 4%. The group said that the price of autumn and winter series in the next few months will be further increased by 4% - 5%, Simon Wolfson said that even if the pound remained stable next year, the price pressure would not ease until the second half of 2018.
In addition, Next PLC announced in February this year that John Barton, who has served as the non-executive chairman of the board of directors for 10 years, will step down on August 1 this year, and Michael Roney will Succession.
By the deadline, Next PLC had risen 6.49% to 4137p, narrowing the cumulative decline so far in 2017 to 17.0%, and the stock had dropped 37.9% in the past 52 weeks.
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