Next Expects Prices To Remain Stable From The Second Half Of Next Year.

According to the world clothing and shoe net, it is the largest in the UK.

Retailer

PLC (NXT.L) has always been regarded as retail.

The main wind vane, so when the management of the group changed the pessimism of the beginning of the year, and in second months to raise the annual performance expectations in two months, investors were greatly encouraged, pushing the group's share price to rise 13% on Thursday, 14, almost enough to offset the decline of more than 14% after the profit warning was issued in January.

At the beginning of this year, Simon Wolfson, chief executive of Next PLC, looked forward to the current financial difficulties of 2017/18. It is expected that the group will need to increase its price by 5% to alleviate the pressure on the cost caused by the sharp depreciation of sterling after the referendum.

But on Thursday, he revealed that the pressure is less than expected, because garment factories in China and other places still have excess capacity, so that they have strong bargaining power, so the group's price increase will be reduced to 4%, and in the first half of next year, it will further decline to no more than 2%.

British authorities' economic data show that local inflation has risen 2.9% in August, the highest level in 5 years, mainly because of the high price of clothing.

In view of the recent improvement in sales as compared with the beginning of the year, the Group expects annual sales to fall to 2%, or 1.5%, after a 3% decline to 0.5%.

The median pre tax profit target has also been raised from 710 million to 717 million, which means that it will drop by 9.3% compared with 790 million 200 thousand in the 2017 fiscal year, which will not increase for two consecutive years.

"The external environment is not optimistic, but from our point of view, the challenges ahead are less than six months ago," Simon Wolfson pointed out in its interim report.

Next PLC is expected to remain stable from the second half of next year.

Next PLC recorded a 9.5% pre tax profit decline in the medium term, falling from 342 million 100 thousand pounds in the same period last year to 309 million 400 thousand pounds, and sales fell 2.2% to 1 billion 914 million pounds compared to the same period last year.

Next brand's full price sales fell by 1.2% year-on-year, including sales of discounted goods, which reduced by 2.3%. The growth of 5.7% of Next Directory business directly facing consumers could not offset the decline of 8.3% in physical retail channels, which had even dropped 7 quarters.

Simon Wolfson said that thanks to its efforts to improve product supply and electronic commerce through data analysis and management, it has made progress in multi line performance in the past few months.

In the two quarter of July 29th, Next PLC recorded a 0.7% revenue growth. The average selling price in July and July also improved significantly. In addition, the Next Directory business surged 11.2%.

After a sharp decrease of 33.1% to 89 million 500 thousand pounds in the retail channel, 45.4% of the sales (868 million 400 thousand pounds) of the Directory business contributed 66.8% of the group's operating profit (217 million 100 thousand pounds).

In a August Research Report, Berenberg analysts said that the huge retail network of Next PLC 538 stores is cumbersome. It believes that the group should substantially reduce the size of the entity and invest more resources in e-commerce, otherwise it will usher in their "Kodak moment".

Next PLC spokesman reiterated that the retail network is an important asset and generates a cash flow of 1 billion a year.

Simon Wolfson pointed out at the beginning of this year that expanding the sales area is still a feasible strategy. In the current 2017/18 fiscal year and the next fiscal year, the group still plans to add 150 thousand and 250 thousand square feet of sales area respectively. He explains that although the pfer of consumption from high street to online channel, the retail profit is shrinking, but the current risk is only that the retail efficiency is reduced. Their high street stores can still make money. Moreover, the main channel for the return of online shopping orders is more than 50% returns.

Moreover, the group's lease is on average only 7 years, shorter than most competitors, and 72% of the lease expires in the next ten years. Simon Wolfson says they can flexibly close the loss shop.

In the next 5 years, the group will invest an additional 5 million pounds a year to upgrade its existing stores and increase its catering facilities to attract customers.

Simon Wolfson also announced that it would restart the share repurchase program.

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