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| Version 5 | Version 6 |
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| Cash rich Next to reward shareholders | Cash rich Next to reward shareholders |
| (about 4 hours later) | |
| Fashion retailer Next has reported strong sales and said its shareholders will receive a share of hundreds of millions of pounds of surplus cash. | Fashion retailer Next has reported strong sales and said its shareholders will receive a share of hundreds of millions of pounds of surplus cash. |
| Christmas sales have exceeded its own expectations and the company has raised its forecast for full-year profits to between £684m and £700m. | Christmas sales have exceeded its own expectations and the company has raised its forecast for full-year profits to between £684m and £700m. |
| It has also announced a one-off dividend of 50p costing the firm £75m. | It has also announced a one-off dividend of 50p costing the firm £75m. |
| In the year ahead it expects to generate £300m of surplus cash which will be returned to shareholders. | In the year ahead it expects to generate £300m of surplus cash which will be returned to shareholders. |
| In its trading update, Next said: "We are now faced with a question as to what to do with the accumulated surplus cash (we already generate more cash than can be invested productively in the on-going development of the business)." | In its trading update, Next said: "We are now faced with a question as to what to do with the accumulated surplus cash (we already generate more cash than can be invested productively in the on-going development of the business)." |
| Outperforming | Outperforming |
| Sales rose 11.9% between 1 November and 24 December compared with the same period last year, which the company said was "significantly" beyond its own expectations. | Sales rose 11.9% between 1 November and 24 December compared with the same period last year, which the company said was "significantly" beyond its own expectations. |
| Investors cheered the trading statement and Next shares jumped 10% by the close of the London markets. | |
| Among the Christmas trading updates released so far, Next, John Lewis and House of Fraser have all reported healthy sales. | Among the Christmas trading updates released so far, Next, John Lewis and House of Fraser have all reported healthy sales. |
| Debenhams has been the major disappointment. On Tuesday, it warned that profits would be lower than forecast after weak Christmas sales. | Debenhams has been the major disappointment. On Tuesday, it warned that profits would be lower than forecast after weak Christmas sales. |
| Next said it had seen a particular improvement in sales of seasonal knitwear and nightwear. | Next said it had seen a particular improvement in sales of seasonal knitwear and nightwear. |
| Sales at its stores rose 7.7%, but like other rivals, it was online sales that really drove growth with a 21% gain between 1 November and 24 December compared with the previous year. | Sales at its stores rose 7.7%, but like other rivals, it was online sales that really drove growth with a 21% gain between 1 November and 24 December compared with the previous year. |
| Next has now raised its annual profit guidance twice in six months. Back in October it had forecast profits of between £650m and £680m for the financial year, which runs to 25 January. | Next has now raised its annual profit guidance twice in six months. Back in October it had forecast profits of between £650m and £680m for the financial year, which runs to 25 January. |
| Analysts said that Next's strategy of not discounting before Christmas had paid off. | Analysts said that Next's strategy of not discounting before Christmas had paid off. |
| "Next's strategy of holding firm on pre-Christmas pricing augurs well for full-year earnings and the business remains one of the sector's outperformers, in stark contrast to some major competitors," said Bryan Roberts from Kantar Retail. | "Next's strategy of holding firm on pre-Christmas pricing augurs well for full-year earnings and the business remains one of the sector's outperformers, in stark contrast to some major competitors," said Bryan Roberts from Kantar Retail. |
| Caution | Caution |
| Keith Bowman, equity analyst at Hargreaves Lansdown stockbrokers said: "Product selection, with knitwear this time a winner, is first class, whilst the group's early adoption of a bricks and clicks business model continues to server it extremely well - the Directory business has again led the way." | Keith Bowman, equity analyst at Hargreaves Lansdown stockbrokers said: "Product selection, with knitwear this time a winner, is first class, whilst the group's early adoption of a bricks and clicks business model continues to server it extremely well - the Directory business has again led the way." |
| However, Next made some cautious comments about the broader economy, in particular the lack of wage growth. | However, Next made some cautious comments about the broader economy, in particular the lack of wage growth. |
| "The problem of little or no growth in real earnings looks set to persist for some time, and we cannot see any reason to expect a significant increase in total consumer spending in the year ahead," the firm said. | "The problem of little or no growth in real earnings looks set to persist for some time, and we cannot see any reason to expect a significant increase in total consumer spending in the year ahead," the firm said. |
| "We are also wary that any return to significant economic growth is likely to result in rising interest rates which, in turn, is likely to moderate spending of those with mortgages." | "We are also wary that any return to significant economic growth is likely to result in rising interest rates which, in turn, is likely to moderate spending of those with mortgages." |