- FTSE 100 ends 80 points higher at 7,564.27
- US stocks continue to advance
- Oil rallies to two-week high
4.45pm: Alibaba lifts confidence
The FTSE 100 closed 1.1% higher at 7,564 in what was a more positive day for equities on both sides of the Atlantic, while oil prices have rallied to a two-week high, commented IG's Chris Beauchamp.
“The news that Alibaba will split itself into six units has proven to be quite the tonic for investors, who have taken this sign of corporate activity as an indication that animal spirits are still active despite the turmoil of the past three weeks," he said.
"Stocks have made further gains today after a mixed session yesterday, and the continued absence of any fresh banking crisis is another big tick in the risk-on column.”
While oil continues to clamber back from the March lows, Beauchamp said it is far from clear whether this short-covering rebound can be sustained in the medium-term.
"Demand forecasts haven’t really picked up, and with no sign of any production cuts coming the overall bearish environment still seems to prevail for now,” he added
By the London close, US stocks were also higher. The Dow Jones Industrial Average advanced 0.6% to 32,597, the S&P 500 was 1% up at 4,012 and the tech-heavy Nasdaq Composite was 1.3% stronger at 11,871.
3.50pm: Banking matters
The FTSE 100 index held just off the session peak with around 40 minutes of trading to go in London, with banking stocks continuing to recover as worries over contagion in the sector following recent collapses by lenders in the US and Europe continues to abate.
Wael Makarem, senior market strategist – MENA at online trading platform Exness commented: “The banking sector remains the center of attention for international investors after fears spiked earlier that bank failures could ignite a large-scale financial crisis. However, the rapid intervention from regulators in the US and Europe has helped limit damage and helped calm investors and clients.
“As a result, volatility has been declining over the last couple of days with confidence returning. However, regulators' actions will remain under scrutiny with the Federal Reserve and FDIC testifying before congress while a review of its oversight systems is being conducted.”
He continued: “Independent investigations could follow suit and could lead to an overhaul of regulatory frameworks, eventually adding to banks’ operating costs. This could come at a time when financial institutions are managing risks in a rising interest rate environment, putting pressure on bond holdings valuation.
“While the US central bank could soften its stance in regard to monetary policy in light of a potential credit crunch, more banks could remain under pressure while interest rates increase for the remainder of the year.
“In this regard, larger banks that are deemed too big to fail could benefit from any new incidents to the detriment of smaller institutions with depositors ready to move their funds rapidly. As a result, banks' stock prices could be sensitive to their ability to capture and retain depositors which could add risks and eventually squeeze profit margin among regional banks.”
3.30pm: Streamlining listing
The Financial Conduct Authority (FCA) has said it will consult on streamlining its company listing rules to help London compete better with New York in company floats, Reuters has reported.
The FCA said it would consult on replacing its twin-track standard and premium company listing regime with a single regime and set of requirements. The UK made some changes to listing rules in 2021 to help attract tech company flotations as part of a wider set of reforms to keep London a globally competitive financial centre after being largely cut off from the European Union by Brexit.
The decision by UK chip designer Arm to only list in New York has added to calls for further changes, with the London Stock Exchange saying that "pace and precision" is needed in reforms.
"Rather than simply lamenting these decisions or insisting that a few regulatory levers would change the outcomes, it is important to recognise there has not until now been a fundamental discussion about the entire ecosystem," FCA chief executive Nikhil Rathi said in a speech, Reuters noted.
"We plan to propose replacing our current standard and premium listing segments for shares in commercial companies with a single listing category with one set of requirements," he added.
The watchdog will propose scrapping requiring companies to have a three-year financial track record as a condition of listing, a challenge for start-ups, Rathi said.
3.15pm: That’s a pain
Bupa Dental Care has announced it will be cutting 85 dental practices after struggling to recruit dentists to deliver NHS care, a move that will affect around 1,200 staff across the country, according to a Press Association report.
The private healthcare group, which provides NHS and private dental care, said the 85 practices will be closed, sold or merged later this year, bringing the total number of practices in the UK down to 365.
All the practices will remain open as usual in the meantime. The employed and self-employed staff affected represent more than a tenth of Bupa Dental’s 9,000-strong workforce.
Bupa said it would redeploy affected staff where possible to different areas of the business.
The company said patients at the affected practices have not been able to access the NHS dental service they need as the provider has not been able to recruit enough dentists to deliver NHS care in many practices for months and in some cases years.
2.50pm: Wall Street wanted
The FTSE 100 index held just below the day's peak as US stocks also opened sharply higher on Wednesday as banking crisis fears abated.
Around 20 minutes after the New York market open, the Dow Jones Industrials Average was ahead 250 points, or 0.8%, at 32,644, while the tech-laden Nasdaq Composite led the way, up 1.4%, and the S&P 500 gained 1.1%.
City Index and FOREX.com market analyst Fawad Razaqzada said: “Judging by the rallying equity markets in Europe, investor sentiment remained supported as the turmoil surrounding the global banking sector appears to be contained.
“On top of this, Alibaba buoyed sentiment in the tech sector after deciding to split into six business units.”
There may also be some bargain hunting for downbeat stocks, an additional reason behind the firmer indices, Razaqzada noted.
2.30pm: Watered down petrol
The UK's 2030 ban on new petrol and diesel car sales could be postponed after the EU watered down its own restrictions amid opposition from German manufacturers, a MailOnline report said.
The agreement passed by Brussels on Tuesday would end sales of new CO2-emitting cars in 2035. But it includes an exemption for cars running on 'e-fuels' – carbon-neutral petrol alternatives – after a backroom compromise with Berlin, which has faced furious lobbying by German carmakers.
It means the bloc will be able to sell new petrol and diesel cars for five years longer than the UK. Critics of the move – which was announced by Boris Johnson when he was prime minister – have now urged the government to follow the EU's lead, the report said.
Ex-Tory leader Sir Iain Duncan Smith quoted in the Telegraph said: 'The 2030 deadline for the elimination of petrol and diesel engine cars in the UK is simply not achievable. Unless we delay, we hand a massive boost to the Chinese car manufacturers. They are already dominant.'
However, the MailOnline said a government source played down the chances of a change of policy.
2.15pm: Annus horribilis for AIM IPOs
London’s AIM market has seen only nine new company listings in the past year, a record low for the market and an 88% decrease on the 74 listings in the previous year, according to research by UHY Hacker Young, the national accountancy group.
Fewer new listings have led to a 97% fall in funds raised in IPOs, from £1.44bn in 2021/22, to just £46mln this year, the report added.
Since it was launched in June 1995, AIM has delivered an average of 138 IPOs per year, fifteenfold more than the nine in the past year. The previous record low was in 2019/20, which saw 22 IPOs during lockdown conditions. In the aftermath of the credit crunch in 2009/10, there were 47 IPOs.
Colin Wright, partner and chairman of the UHY Hacker Young Group, said investors have become more risk-averse as interest rates have risen and are now markedly less interested in smaller, high-growth, higher-risk investments. This has hit equity markets overall, but particularly growth markets like AIM.
Wright added: “The past 12 months have seen tumultuous market conditions. It has been the annus horribilis for speculative technology companies and the annus horribilis for AIM IPOs and investment banking community that works in that area.
“Volatile market conditions make it very hard to get an AIM IPO away. The last year has seen more than enough shocks to disturb the market from Ukraine, to runaway inflation, to Credit Suisse.”
1.25pm: Some top movers and fallers on the junior market
GSTechnologies Ltd (LSE:GST) shares rallied over 17% as the company said it no longer needed its convertible loan facility. The company, in a statement, told investors it would no longer make the second drawdown under the facility (which would have been for US$800,000).
Strix Group PLC (AIM:KETL) saw its shares rise 7.4% to 94.70p as a bullish outlook statement offset 2022 results showing a drop in profits and revenue.
TinyBuild Inc shares rose 7% to 48.67p in early trading as results for last year came in below forecast but the indie video games group said it has an exciting pipeline of larger-budget games that keeps expectations on track for this year.
Kistos shares fall 8% after the oil and gas producer pointed to “mixed” results from recent drilling on the Q10-A gas field off the Dutch coast. The drill rig faced issues “due to mechanical issues arising from utilising the existing well stock”, it said.
BSF Enterprise shares fell around 12% to account for a new equity funding, with a £2.9mln share placing described as “oversubscribed”. The company, in a statement, said it would use the proceeds to support its ‘lab-meat’ subsidiary 3D Bio Tissues, which is growing rapidly.
1.00pm: US stocks seen higher
Wall Street is expected to open higher as investor sentiment improves on the back of a recovery in bank stocks even as rising bond yields signal the possibility of another interest rate hike.
The brighter mood across the pond has helped keep the FTSE 100 in good spirits advancing to its best levels for the day at 7,547.09, up 62.84 points, or 0.84%.
Futures for the Dow Jones Industrial Average (DJIA) rose 0.7% in pre-market trading, while those for the broader S&P 500 index gained 0.9%, and contracts for the Nasdaq-100 added 0.8%.
Treasuries have given back gains on the back of weaker risk aversion, with the US 2-year yield settling above the 4% mark, noted Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The rising bond yields put pressure on interest rate-sensitive tech stocks on Tuesday, pushing the Nasdaq Composite 0.5% lower to 11,716 by the close for a second day of losses. The DJIA shed 0.1% to 32,395 and the S&P 500 index dipped 0.2% to 3,971.
“The S&P500 and Nasdaq come under the pressure of rising yields, which means – if banking stress wanes – the US will go back to fighting inflation, and that could mean another 25 basis point hike from the Federal Reserve (Fed) in May,” Ozkardeskaya commented.
“For now, activity on Fed funds futures still point at ‘no hike’ as base-case scenario, with around a 60% chance for status quo."
Today sees the release of pending home sales in the US and investors also will be looking to Friday’s release of the personal consumption expenditures price index, also referred to as the PCE deflator, the Fed's preferred measure of inflation, for further insight into the central bank’s next move.
“Today’s US pending home sales for February are expected to show a further retreat but investors will likely look past this data as they focus on Friday’s PCE deflator data, widely known as the Fed's preferred gauge for inflation,” commented TickMill Group market analyst Patrick Munnelly.
“Headline annualised inflation is expected to decline but core inflation is expected to remain stubbornly elevated which will keep Fed officials firmly focused on the inflation battle,” he added.
12.38pm: CMA to investigate Broadcom/VMware deal
The UK's competition watchdog will launch an in-depth review of US chipmaker Broadcom's US$61bn takeover of cloud-computing company VMware.
The Competition and Markets Authority said its concerns have not been addressed that the deal could increase costs for customers including banks and telecommunication firms.
The CMA said last week that it believes the deal could lessen competition within the UK and gave both companies until today to offer undertakings that might be accepted by the CMA.
It has set a deadline of September 12 to make its decision over the merger.
Broadcom's acquisition is already under scrutiny from European regulators.
Broadcom makes a wide range of electronics, with its products going into everything from Apple's iPhones to industrial equipment, while VMware makes virtual software that allows users to access systems remotely.
12.18pm: Ovo Energy eyeing Shell UK's retail gas and electricity arm
Ovo Energy is plotting a takeover of Shell's UK domestic gas and electricity business in a move that would see it reclaim the number two slot in the British market, according to a report.
Sky News said that Ovo is expected to table an indicative offer for Shell Energy Retail Limited's (SERL) UK operation, which has 1.4mln energy customers.
EXCLUSIVE: Ovo Energy is plotting a takeover of smaller rival Shell Energy Retail Limited that would see it leapfrog Octopus Energy and regain the status of Britain’s second-largest household gas and electricity supplier. An offer could be tabled today. https://t.co/haDbgqvK21
— Mark Kleinman (@MarkKleinmanSky) March 29, 2023
Sources said that a bid would be tabled on Wednesday to meet an informal deadline set by Lazard, which is overseeing the process on Shell's behalf.
If successful, it would grow Ovo's customer base from about 4mln UK households to 5.4mln households, edging it ahead of Octopus Energy, which, following its takeover of the nationalised supplier Bulb, now has close to 5mln household customers.
Industry executives said that Centrica, the owner of British Gas, had also been exploring an offer for the SERL arm.
Such a move would be controversial because it would see the industry's largest player substantially grow its market share.
11.47am: Bank urges further action on LDIs
Further to its statement on the health of the UK banking system (see below) the Bank’s Financial Policy Committee has also urged action to deal with liability driven investment funds (LDIs) which came under pressure in the wake of the mini budget in September.
The central bank was forced to step in with a new round of government bond purchases last autumn after Truss’s package of unfunded tax cuts triggered a surge in gilt yields.
The FPC has recommended that The Pensions Regulator (TPR) takes action as soon as possible to mitigate financial stability risks by specifying the minimum levels of resilience for the LDI funds and LDI mandates in which pension scheme trustees may invest.
The FPC judges that these factors imply that LDI funds should be resilient to a yield shock of around 250 basis points, at a minimum, in addition to the resilience required to manage other risks and day-to-day movements in yields.
Meanwhile the FTSE 100 is close to its best levels for the day, at 7,543.75, up 59.50 points, or 0.80%.
11.33am: UK's banking system is robust and strong - FPC
The UK banking system maintains robust capital and strong liquidity positions and is well placed to continue supporting the economy throughout a wide range of economic scenarios, including in a period of higher interest rates.
That was the findings of the Bank of England’s Financial Policy Committee (FPC).
The FPC said the regulations in place for UK banks mean that they have significant financial resources to absorb shocks. UK bank profits are currently healthy, and UK banks have no significant exposures to banks that have failed or are in trouble.
“We judge that UK banks are resilient and are strong enough to continue supporting households and businesses,” it said.
The FPC pointed out that since the global financial crisis of 2008 UK authorities has put in place a range of robust prudential standards, designed to ensure levels of resilience which are at least as great as those required by international baseline standards.
It said the UK banking system is well capitalised with the aggregate Common Equity Tier 1 (CET1) ratio for major UK banks standing at 14.6%, while smaller lenders have an aggregate CET1 ratio of around 18%.
Asset quality is stronger now than in the run-up to the global financial crisis.
Major UK banks have large liquid asset buffers, around two-thirds of which are currently either in the form of cash or central bank reserves.
The FPC noted the profitability of UK banks has increased recently, reflecting higher net interest income as interest rates have increased and that UK banks are not exposed to material direct losses associated with the failure of SVB and takeover of Credit Suisse.
It said it will continue to monitor developments closely, in particular for the risk that indirect spillovers impact the wider UK financial system.
10.48am: Oil price continues to rise
The oil price has risen for a third consecutive day with the price of Brent crude up 0.6% at US$79.14.
Fiona Cincotta at City Index said the gains come amid ongoing supply concerns and as the demand outlook improves.
“A dispute between Turkey and Iraq surrounding oil supply from Kurdistan remains unresolved and has resulted in halted shipments of around 400,000 barrels a day, tightening the market,” she said.
She felt supply concerns will continue to support oil prices while the dispute continues.
Meanwhile, easing banking concerns added to the bullish mood towards oil, she noted.
“As did a significant fall in stockpiles. The API reported a 6.1 million decline in US inventories last week, the largest decline so far this year. Investors will now watch closely to see whether this is confirmed by government figures later today,” she added
US EIA oil inventories have gained 10 out of the past 11 weeks, she noted, adding a surprise rise in inventories could put pressure on the oil price.
10.22am: Is Next ex-growth?
Russ Mould at AJ Bell posed the question whether Next is ex-growth as he reflected on today’s results.
He noted Next chief executive Simon Wolfson has followed the mantra ‘under-promise, over-deliver,’ being one of the few corporate leaders who never tries to make a situation look better than it is.
True to his word the latest guidance from Next is as cautious as you can get, Mould noted.
He pointed out Next is preparing for a tough year ahead. “There is no upgrade to earnings guidance and there is even comment on the question people are starting to ask – is Next now ex-growth? It’s no wonder the share price has taken a tumble,” he added.
Mould thinks Next is in an odd situation. “While lauded as a best-in-class retailer, there is no denying that growth has slowed over the past eight years.”
“That period also coincides with a concerted push to broaden its income streams, developing its website as a hub for third parties to sell their brands while making its stores more relevant via click and collect services.”
“Next’s decision not to abandon its high street presence was a wise one, particularly as physical stores are coming back into fashion.”
He noted there are positives, inflationary pressures are easing and demand for clothing and footwear remains strong.
“One could argue that Next has been laying the foundations for future growth,” Mould suggested but he added the “key question now is whether its new strategy will yield the kind of returns enjoyed in the past.”
Shares in Next are now 5.5% lower while the FTSE 100 is trading 0.7% higher.
9.52am: Mortgage approvals rise but overall lending hits 7-year low
Latest figures from the Bank of England show net mortgage approvals for house purchases increased to 43,500 in February, from 39,600 in January. This marked the first monthly increase since August 2022.
The figure was ahead of City forecasts for a rise of around 41,300.
UK Mortgage Approvals Feb: 43.5K (est 41.3K; prev 39.6K)
- UK Net Consumer Credit Feb: £1.4B (est £1.2B; prevR £1.7B)
- UK Consumer Credit (Y/Y) Feb: 7.7% (prev 7.5%)
- UK Net Lending Sec. On Dwellings Feb: £0.7B (est £2.4B; prevR £2.0B)
— LiveSquawk (@LiveSquawk) March 29, 2023
The Bank said that net mortgage lending to individuals decreased from £2.0 billion to £0.7 billion in February which excluding the pandemic was the lowest level of net borrowing since April 2016 (also £0.7 billion).
The ‘effective’ interest rate – the actual interest rate paid – on newly drawn mortgages increased by 36 basis points, to 4.24% in February.
Consumers borrowed an additional £1.4 billion in consumer credit in February, on net, compared with £1.7 billion borrowed during January.
This was split between £0.6 billion of borrowing on credit cards and £0.8 billion of borrowing through other forms of consumer credit.
9.27am: Smith & Nephew gets double downgrade; UBS bullish on Bellway
Away from Next and other stocks on the move include Smith & Nephew which has been double downgraded by Barclays to underweight from overweight.
The broker has also lowered its price target to 11,000p from 14,800p although its EPS estimates are broadly unchanged. Shares fell 1%.
The same broker has given a boost to Flutter Entertainment increasing its price target to 14,000p from 11,000p but keeping an equal weight rating. Shares edged 0.5% higher.
Bellway PLC (LSE:BWY) rose strongly on further consideration of its results. UBS reiterated a buy rating and upped its price target to 2,500p from 2,190p.
“We remain bullish on Bellway's shares given the cheap valuation (0.7x P/TNAV), strong balance sheet and proven track record of volume growth into a recovery.”
JPMorgan was also bullish, reiterating an overweight rating and lifting its target price to 2,670p from 2,620p.
Shares rose around 4%.
DFS Furniture advanced 1.6% boosted by an upgrade by UBS to neutral from sell .
The Swiss bank said consensus estimates have derisked – “the market seems to be pricing in weaker industry demand & lower gross margin.” UBS raised its price target to 135p from 127p.
Also heading upwards was Spirent PLC also upgraded by UBS to buy from neutral. Despite cutting its price target to 244p from 280p the broker feels the recent share price weakness is overdone.
Meanwhile, the FTSE 100 continues to push higher now up 49 points, or 0.7%, at 7,533.29.
9.00am: Next tumbles as long-term growth prospects questioned
Blue chip stocks continue to advance extending early gains now up over 30 points at 7,517.
Susannah Streeter, head of money and markets, Hargreaves Lansdown said: “With banking worries put on the back burner for now, with no further stresses in the system emerging, investors’ appetite for a bit more risk is returning.”
But Next dominated proceedings, tumbling 7.3%.
Streeter noted the Leicester-based retailer reiterated guidance that sales would fall 1.5% this year and for profits to fall.
“Hopes that a magic wand might materialise to dramatically improve the retailer’s fortunes have ebbed away, but there will be relief for shoppers that further price hikes in clothing costs will be more muted,” she said.
Shore Capital analyst Eleonora Dani noted the outlook for pre-tax profit of £795mln in the current financial year was slightly below consensus of £805mln.
“With profits set to decline, we question its prospects for longer-term growth,” she added.
“Although the company is focusing on online growth, cost management, and investing in technology and infrastructure, we are not fully confident that these initiatives will deliver growth for shareholders,” she stated.
Dani has a hold rating on Next.
Taking a more optimistic view were Liberum analysts.
In a note analysts wrote: “The group’s big picture outlook highlights that transition from retail stores to online over the last 8 years is nearly over and the group remains more optimistic of future growth than it has been any time in the recent past, driven by opportunities from Total Platform, recent M&A and investments, new brands on LABEL platform and overseas opportunity.”
Liberum has a buy rating on Next.
Richard Hunter at interactive investor, commented “Next has beaten expectations and has also laid some ambitious foundations for what it considers to be the next big leg of growth.”
He noted Next has been a company which has languished in terms of market consensus over recent years, despite being generally well-regarded and certainly well-managed.
He said “the challenges will undoubtedly continue to come thick and fast in the notoriously competitive retailing space, but Next seems ready for the fight.”
8.38am: UBS brings backs former CEO
UBS is bringing back former CEO Sergio Ermotti to lead the Swiss banking giant's controversial acquisition of troubled rival Credit Suisse.
Ermotti spent nine years restoring UBS's reputation after its bailout by the Swiss government and the central bank during the 2008 global financial crisis, as well as the USD2.3 billion in losses racked up by a rogue trader in 2011.
A UBS statement said he is due to take over on April 5 from current boss Ralph Hamers, who has agreed to step down but will remain at his side during a transition period.
"The task at hand is an urgent and challenging one," Ermotti, who is currently chairman of reinsurance giant Swiss Re, said in the statement.
"In order to do it in a sustainable and successful way, and in the interest of all stakeholders involved, we need to thoughtfully and systematically assess all options," he said.
UBS shares opened 1.8% higher following the announcement of his return.
8.15am: FTSE pushes higher
The FTSE 100 advanced in early trading as a degree of calm continued to return to the market after recent volatility
At 8.15am London’s lead index was at 7,505.94, up 21.69 points, or 0.29% while the FTSE 250 advanced to 18,445.80, up 49.11 points, or 0.27%.
“Two days of relative calm has helped encourage a quieter week,” strategists at Deutsche Bank said.
Shares in Next tumbled 5.6% despite better-than-expected annual pre-tax profit.
The retailer delivered full-year profit ahead of guidance boosted by higher margin retail sales and a better end-of-season sale.
Pre-tax profit for the year to January 31 of £870mln, was 5.7% higher than the previous year, 16.3% higher against 2019/20, and £10mln higher than the previous guidance of £860mln.
The Leicester-based firm said the number was boosted by higher margin retail sales and better-than-expected clearance rates in the end-of-season sale. Both added £5mln to profit.
Next maintained its guidance for the current financial year for both sales and profit. It expects full-price sales to be down 1.5% versus last year and profit before tax to be £795mln.
Josh Warner, Financial Markets Analyst at City Index said: "An 8% jump in sales and record profits should win Next some applause considering how challenging the environment is for retailers."
"However, Next has warned full price sales will fall this year and profits are set to drop 7.6% to £795 million. That suggests both growth and profits have peaked."
Next also expects selling price inflation to be more benign than previously thought. Like-for-like price inflation in Spring/Summer is expected to be +7% and, in Autumn/Winter, +3% (previously +8% and +6% respectively).
On the data front, investors will be eyeing the latest UK figures for mortgage approvals and lending from the Bank of England.
"UK mortgage approvals have seen a sharp slowdown in the last few months as higher interest rates and the rising cost of living serves to crimp demand, even as the lead-up to Christmas tends to see a slowdown in demand," CMC Markets' Michael Hewson noted.
"In January mortgage demand fell to its lowest level since 2020 at 39,600, and today's February numbers aren't expected to see a significant pickup with expectations of around 40,000.
In the FTSE 250 Essentra gained 2% in early exchanges after reporting solid growth in full year revenue and underlying operating profit as increased prices offset volume declines.
For the year to December 31, revenue grew 12.0%, to £337.9mln and adjusted operating profit improved by 12.0% to £63.7mln, before central costs.
Adjusted operating margin increased 18.9% before central costs, driven by strong pricing delivery offsetting inflation, and management of the cost base.
But after adjusting for costs allocated to discontinued operations the firm reported an operating loss of £11.3mln (2021: £7.7mln profit) after recognising central costs previously allocated to the discontinued operations.
Expectations for the coming year remain unchanged. “The business has the ability to manage volume impacts through implementation of pricing actions, and careful cost management, validated by historical through-cycle margin resilience,” it said in a statement.
Shares in JD Wetherspoon rose 0.8% as Deutsche Bank increased its price target to 750p from 640p.
7.40am: Next profit tops guidance
Next PLC (LSE:NXT) delivered full year profit ahead of guidance boosted by higher margin retail sales and a better end of season sale.
Pre-tax profit for the year to January 31 of £870mln, was 5.7% higher than the previous year, 16.3% higher against 2019/20, and £10mln higher than the previous guidance of £860mln.
The FTSE 100 listed firm said full price sales in January were flat and in line with guidance but higher margin retail sales were greater than expected, adding £5mln to profit while another £5mln lift by better than expected clearance rates in the end-of-season sale.
The Leicester-based retailer said trading sales totalled £5.15bn, up 8.4% from £4.75bn in the previous financial year with full price sales up 6.9% versus 2021/22 and 20.5% against 2019/20.
This was driven by a strong performance in retail where sales jumped 30% to £1.87bn while online sales dipped 2% to £3.07bn. In the last eight weeks Next said full price sales in the last eight weeks were down 2.0%.
Basic earnings per share reached a record 573.4p , up 8.0% versus 2021/22 and 21.4% versus 2019/20.
Next maintained its guidance for the current financial year for both sales and profit. It expects full price sales to be down 1.5% versus last year and profit before tax to be £795mln.
Selling price inflation is forecast to be more benign than previously thought. Like-for-like price inflation in Spring/Summer is expected to be +7% and, in Autumn/Winter, +3% (previously +8% and +6% respectively).
The company expects performance in the first half of the year to be weaker than in the second half.
This is because, in the first half last year, unusually warm summer weather coincided with the release of pent-up demand for summer events after the pandemic.
Next paid a final dividend of 140p taking the total for the year to 206p. It intends to maintain this level of payout in the current financial year as well as return £200mln via share buybacks.
7.00am: FTSE set to edge higher
The FTSE 100 is set to edge higher at the open in cautious trading in the absence of any fresh catalysts for direction.
Spread betting companies are calling London's lead index up by around 8 points.
"European markets struggled for direction yesterday, with upward pressure on short-term [bond] yields serving to act as a modest drag on the market's ability to build solidly on the gains seen on Monday," said CMC Markets' Michael Hewson.
"There still appears to be an abundance of caution when it comes to driving prices higher, in the wake of the turmoil of last week with the rise in yields also pressuring US markets, which also struggled with the Nasdaq 100 feeling the effects of firmer rates the most."
In the US, the Dow Jones Industrials Average closed Tuesday down 37 points, 0.1%, at 32,395, the Nasdaq Composite fell 53 points, 0.5%, to 11,716 and the S&P 500 dipped 6 points, 0.2%, to 3,971.
In Asia on Wednesday, the Nikkei 225 index was up 0.8%. In China, the Shanghai Composite was down 0.1%, while the Hang Seng index in Hong Kong was up 2.1%. The S&P/ASX 200 in Sydney closed up 0.2%.
Back in London and the early focus will be on results from retailer Next and advertising agency S4 Capital.