Next predicts £10m profit after suspension of online sales to Ukraine and Russia
Fashion retailer Next has lowered its profit forecast by £10million after halting online sales in Ukraine and Russia.
The high street name has also slashed its full year 2022/2023 sales forecast by £85m, a 2% drop.
In results released on Thursday, it forecast full price sales to rise 5% and group profits to reach £850m, up 3.3%.
An improving outlook for UK retail sales would mitigate the expected loss of low-margin overseas sales and the associated cost of increased shrinkage, Next noted. The closure of its Ukrainian and Russian businesses was expected to result in a loss of profit of £18m before UK performance was factored in.
It recorded a pre-tax profit of £823m, a 140% increase on the previous year, for the year to January 2022. The brand’s full-price sales rose 32% compared to the previous year.
The retailer said its performance last year exceeded expectations, despite several months of physical store closures due to the Covid lockdown.
Prices would increase by an average of 8%, the firm revealed.
There has been a “very sharp reversal” in lockdown fashion trends, with shoppers again ditching casual wear for more formal options.
“We are seeing a return to pre-pandemic trends,” said next boss Lord Wolfson CityA.M. Thursday afternoon.
Shoppers were also looking for more investment and buying fewer cheaper items, Wolfson added.
The CEO said the company assumed its operations in Ukraine would remain closed for the rest of the year.
Wolfson said he didn’t want to “get into the ins and outs” of how long his Russian site would be shut down.