Despite spending the last few months of 2014 whining about the warm weather, Next had a year it should be pretty happy with. In October the clothes retailer warned it was likely to miss its previous. forecasts, but pre-tax profits were up 12.5% to £782.2m in the year to January, in line with expectations.
Sales were up 7.2%, helping the brand break through the £4bn barrier for the first time in its history. This was partly thanks to a massive surge by Next Directory, its online and catalogue business, sales from which were up 12.1%. It had a strong Christmas too, despite shunning the mania of Black Friday discounting.
Strong profits allowed it to return £572m to investors through a combination of dividends and buybacks, but the chain's share price was still looking pretty unhealthy this morning, falling as much as 5.4% to 7,200p this morning. That's likely the result of cautious forecasts for next year - Next said it expects sales to grow by 1.5%- 5.5% and profits to be up 0.4%-6.7%.
'Although the consumer economy looks benign, we remain very cautious in our sales budgets,' said its chief exec Lord Wolfson. 'Whilst we are happy with most of our current product ranges, we recognise that some collections are not as strong as they were at this point last year.'
He said that the projected figures would be 'very respectable by most standards', but conceded they looked bad compared with Next's track record. 'However, they are based on realistic sales estimates and we believe that it would be a mistake to be over-optimistic at this stage.'
Cautious optimism is always a wise approach to take, but at a time when most retailers are struggling, not least Next's bitter rival M&S, even 1.5% sales growth would be something to be happy about.