Next Joins Zara and H&M in Recovery From Covid-19 Lockdowns

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Next Plc raised its outlook for a second time since coronavirus lockdowns shut its stores, joining apparel chains Zara and H&M in reporting better-than-expected recoveries.

  • The U.K. retailer now expects a pretax profit of 300 million pounds ($388 million) for the year. The midpoint of the company’s previous forecast was 195 million pounds.

Key Insights

  • Next has raised its outlook twice since the height of the pandemic. In April, Next’s worst-case scenario was a loss of 150 million pounds and its midpoint was for no earnings. In July, it upgraded the outlook after stores reopened.
  • The retailer said its sales through the pandemic have been more resilient than expected, and its annual full-price sales will now be down only 12%. Next has not reinstated the interim dividend because of continued uncertainty about the economic effects of Covid-19.
  • Next’s update comes after Spanish retailer Inditex SA, the owner of Zara, also buoyed the market, reporting another quarter of steady improvement. Sweden’s Hennes & Mauritz AB surprised with a stronger-than-expected return to profit.

Market Reaction

  • Shares in Next have fallen by about 12% since the start of the year.

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  • Read the full statement here

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