Next Plc, the U.K.’s second-largest clothing retailer, raised its full-year profit forecast after third-quarter sales growth exceeded analysts’ estimates, sending the shares to a record.
An unexpected increase in sales at the company’s stores added to accelerating revenue growth at the Directory home-shopping unit, figures released today showed.
Next shares rose as much as 8 percent in London, the steepest advance in more than two years. The company, with more than 500 outlets across the U.K. and Ireland, is plowing ahead with store expansion, which it says provides a boost to online sales as more than a third of orders are collected from them.
“Investors will be encouraged by the performance in the third quarter and by the increased guidance,” Jamie Merriman, an analyst at Sanford C. Bernstein, said in a note.
Next forecast that full-year brand sales may increase by as much as 3.75 percent, having previously anticipated an increase of as much as 3.5 percent. The retailer expects full-year pretax profit of as much as 680 million pounds ($1.1 billion), up from a previous forecast of as much as 675 million pounds.
Next shares were up 6.2 percent at 5,530 pence at 8:32 a.m., after rising to a record 5,385 pence. The stock has gained 49 percent this year, giving the Leicester, England-based company a market capitalization of about 8.6 billion pounds.
Total sales under the Next brand rose 4.3 percent in the third quarter, excluding value-added taxes, the company said in a statement today. The median of 16 analyst estimates compiled by Bloomberg was for a 2.9 percent gain.
Retail sales increased 0.4 percent, beating the median analyst estimate for a 1 percent decline. Next Directory revenue climbed 11 percent, taking the year-to-date gain to 9.2 percent.