Next expected to post profits drop, say analysts

Analysts have predicted that clothing chain Next will be latest retailer to report a fall in profits this Friday.

It is expected that the 154-year-old company will report earnings of £725m – an 8% drop in annual pre-tax profits compared with last year’s figure of £790m.

However, analysts also said that the outlook was positive for the retailer with higher sales and higher margins expected.

George Salmon, equity analyst at Hargreaves Lansdown, said: “Next’s Christmas trading update showed high street sales continuing to suffer. That’s a trend that looks set to continue, but the outlook for next year has improved.

“The group expects sales growth to firm up as online continues to deliver good results. Meanwhile, cost inflation is expected to ease, and then disappear, over the course of 2018.”

He added: “All that bodes well – higher sales and higher margins mean doubly higher profits in the longer term. However, retail still accounts for a huge slice of sales, and with conditions remaining tough, it’s likely to be far from plain sailing.”