Sector movers: Next warns of difficult 2008
Next's results brought no cheer to the retail sector this morning as it warned that trading conditions in the year ahead will continue to be difficult as increased costs and rising taxes put pressure on customers.
Going forward, Next says "It can see no reason why there should be any recovery in consumer spending during the year ahead."
As a result it has based internal budgets for the first half on retail like for like sales of between -4% and -7%, worse than last year, and Directory sales of between 0% and +2%.
In 2007, pre-tax profits came in at £498m, up 4.1%, and compared with forecasts of about £497m. Sales rose by 1.4% to £3.33bn, though Next Directory did much better than the high street stores.
The retail chain finished the year with sales up 0.1% and like-for-like sales down -3.2%, within its guidance of -1% to -4% like-for-like and better than the minus 7% like-for-like seen the year before.
Directory sales increased by 3.3%. Improved stock availability and increased service charge income meant that sales rose faster than underlying demand. Sales growth was driven by a 1.2% increase in the average number of active customers and a 16.5% increase in pages.
The dividend for 2007 rises by 12.2% to 55p.
Imperial Tobacco said adjusted profit for the year will be reduced by one-off accounting adjustments required under IFRS but added it will have no effect on the underlying business performance.
It currently estimates the impact on adjusted profit will be a reduction of around £110m in the first half and around £30m in the second half, bringing the total to £140m for the year to September 2008.
"The most significant of these relate to the uplift to fair value of stocks and the elimination of inter-company sales. Other adjustments relate to depreciation, assets held for sale, derivatives and intangible assets," it said.
The group added that trading performance for the financial year remains in line with management's expectations
Imperial added that it continues to remain confident of achieving operational efficiencies of around €300m by 2010 for Altadis.
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