Next Lifts Profit Forecast Again 

(Bloomberg) -- Next Plc raised its annual earnings forecast for the third time as demand for childrens clothes and home products helped ensure the retailer’s continued recovery from a nationwide lockdown.

The clothing chain, a linchpin of many British shopping areas, now expects a pretax profit of 365 million pounds ($476 million) for the year. The midpoint of the company’s previous forecast was 300 million pounds.

Next’s performance has been steadily improving as online sales increase and the stores recover from a three-month mandatory shutdown in the spring at the height of the pandemic. The retailer’s current outlook is very different from April, when its worst-case scenario was for a loss of 150 million pounds and its midpoint was no profit at all.

Next said the recent tightening of restrictions on social interaction in many parts of the U.K. hasn’t affected business. Third-quarter sales were up 2.8% from the same time last year. It now expects full-year sales to be down 17%, compared with an earlier estimate for a drop of 20%.

The “biggest single unknown” is whether England, Northern Ireland and Scotland will follow the Welsh government and shut non-essential shops again, Chief Executive Officer Simon Wolfson said.

“Things have panned out much better than we expected from where we were in April,” Wolfson said in an interview. Though sales of adult clothing are lower than last year, that’s been offset by higher-than-expected sales of kidswear and home goods.

Shares of Next were little changed in London. They have rallied from a low reached in April, but are still down about 13% for the year.

Next said it could face a 13 million-pound increase in annual import duty costs under the U.K. global tariff system in the event of a no-deal Brexit. The company should be able to offset much of this increase through “resourcing or renegotiation,” it said in a statement.

While Next is prepared for a no-deal Brexit, “our preference is definitely for a deal because at the end of the day we think free trade is a good thing,” Wolfson said. If there isn’t a deal, he said he hopes the government will review general tariffs on products that aren’t produced in the U.K.

©2020 Bloomberg L.P.