Profit before tax rose 5.7% to £870.4 million and after-tax profit was up 5% at £711.7 million. Those figures were an increase of 16.3% and 16.6% respectively, compared to pre-Covid.

By division, Online sales fell 2% to £3 billion, although they were up 40% compared to three years ago. Physical Retail sales rose 30% to £1.86 billion. It was particularly significant to hear that physical store sales were also up 1% against the pre-pandemic period. Meanwhile finance sales were up 10% at £274 million.

Operating profit Online fell 23% to £467.3 million, but was up 12% against three years ago, and Retail operating profit rose 125% to £240.5 million and 3% against the pre-Covid year.

It added that full-price sales rose 6.9% against the previous year and 20.5% against the pre-pandemic year. And while full-price sales in January were flat, in line with its guidance, higher-margin Retail sales were greater than expected, which added £5 million to its profit. Clearance rates in the end-of-season sale were also ahead of expectations. 

The retailer is maintaining existing guidance for the current year, budgeting for full-price sales to be down 1.5%, and for profit before tax to be £795 million. It added that selling price inflation is forecast to be more benign than previously expected. It sees like-for-like price inflation for SS23 to be 7% and for AW23 to be 3%. It had previously expected increases of 8% and 6% respectively.

It continues to see strong growth potential, both for acquired businesses and its established Next label, saying that “Next has around seven million Online customers in the UK, close to 25% of the UK’s 28 million households. Our 466 stores give us a presence in almost all major UK and Ireland trading locations. So the opportunities to expand our customer base, trading space and product offer are less numerous than they were. But we are far from running out of ideas. Our product teams continue to push the boundaries of their offers, in terms of design content, price architecture and product categories. 

“Our e-commerce and marketing teams can still do much more to recruit and retain new customers, and drive growth in website traffic, online conversion and sales per customer. The Next brand accounts for less than 10% in most of its key markets. So while our market share renders exceptional growth unlikely, we are a long way from reaching saturation”.

The business is also focused on developing via acquisition and has been extremely active on the buying front. In 2021 it acquired a 25% stake in ReissJoulesVictoria’s Secret and Gap

And it said it has “successful” direct to consumer online businesses in many overseas markets and some very productive partnerships with local aggregators such as Zalando

It’s currently pursuing ways of boosting some of those less buoyant markets with initiatives such as wholesaling or franchising products to local operators, as well as licensing arrangements with local operators and wider use of local aggregators to reach new consumers and raise brand awareness. 

The company has also created a new division to focus on investments, acquisitions, and third-party brands with Jeremy Stakol joining next month to run that.

And while it said “the year ahead looks like it will be challenging” with the combination of inflation in its cost base and top-line sales that are likely to edge backwards being “uncomfortable”, it added that “the company is well prepared”.

“Looking through next year to the longer term, our prospects feel more positive than they have done for some time. The burdens of the structural change to our industry appear to have eased, our Retail business is a much smaller percentage of the group than it was eight years ago, and its rent and rates bill is slowly adjusting to reflect current levels of retail demand. This year, the group will focus on improving its product ranges, online service levels and cost controls. As importantly, the group is also laying the foundations for new avenues of growth to complement and leverage our heartland business”.