Closure of Ukrainian and Russian websites will cost Next Plc £85m in lost sales

Next Plc has revealed the big hit it expects to take by closing its operations in Russia and Ukraine.

The high street fashion and homewares chain said it would lose sales of around £85million this financial year by closing its websites in the two countries.

He said the war would cut his profits by £18 million, but said strong British trade would partly offset this.

The Leicestershire-based retailer said earlier this month it was closing its Russian distribution site following Putin’s invasion of Ukraine.

It lowered its profit target by £10m following the dispute, but said it still expects a 5% increase in sales for the year. Profits, he said, were expected to rise 3.3% to £850m over the next 12 months.

It comes as the company said pre-tax profits jumped 140% to £823million for the year to January, compared to the previous year – which was hit hard by Covid – with profits also 10% above pre-pandemic levels.

Next said this was supported by a 12.8% increase in the brand’s full-price sales for the year compared to pre-pandemic levels.

Total sales for the year rose 11.5% to almost £4.862 billion.

The FTSE 100 company said UK sales were “ahead of what we expected” in the last three months of the current year after a strong comeback in stores.

It also highlighted a “very sharp reversal” in lockdown fashion trends, as formal wear recovered and spending on homewear and very casual wear plummeted.

Incoming Chairman Michael Roney said, “We enter 2022 with confidence in the prospects of our business and its ability to continue to evolve successfully.

“The effects of the pandemic continue and we remain mindful of macroeconomic and geopolitical risks, but our continued investment over many years in our people and systems has delivered strong and resilient results over the past year and we believe it will continue to do so.”

Russ Mould, chief investment officer at major online brokerage AJ Bell, said it was a pleasant surprise that Next had lifted the forecast for likely UK store sales given the direction of retail travel. British.

He said the business was enjoying significant success thanks to consumers splashing the cash they saved during the Covid shutdowns, and it seemed inevitable that the coming months could be tougher given inflationary pressures. and household bills becoming much higher.

He said: “Recent sales trends have seen consumers spruce up their appearance perhaps as more and more people are called back to work in the office. This momentum could last a bit longer as this is probably non-discretionary spending.

“But as we head into summer, chances are consumers will be looking for ways to cut back on non-essential spending, and shopping for vacation and party outfits will become less common.

“Next management will be fully aware of this risk, but they are still focused on the long term. There will always be ups and downs with sales patterns and the company is in shape to be able to think on its feet and move with the times.

“It benefited from an established and efficient online operation when Covid first hit, it now benefits from offering a wide range of third-party products that make its website a one-stop-shop for fans of fashion.”