Next has raised its profit guidance for the 2021/22 financial year despite a slump in earnings during the coronavirus crisis.

The fashion giant suffered a 53% drop in pre-tax profit to £342m in the year to the end of January as the businesses battled what it called “a crisis unprecedented in living memory”. Operating profit tumbled 50% to £384.2m.  

Online sales grew 10% across the 52-week period to £2.37bn, while revenues raked in from stores fell 48% to £954.5m as its portfolio was forced to close for much of the year.

Total sales across the group slipped 17% to £3.6bn. Full-price sales, one of Next’s core KPIs, declined 15%.

Despite the challenging 12 months, Next raised its central profit guidance by £30m to £700m for its 2021/22 fiscal year. 

The retailer said while full-price sales would likely be flat compared to 2019/20, online sales had been “stronger than expected” in the first eight weeks of its new financial year, growing 60% compared to two years ago.

Although the anticipated end of the national lockdown on April 12 will come two weeks later than Next had assumed in its previous guidance, profit lost during that fortnight has been offset by the extension of business rates relief.

Even though its outlook remained bullish, Next boss Lord Wolfson cautioned that the wider retail outlook remains “uncertain”.

“The health of the consumer economy, the future course of the pandemic and the prospects for retail stores remain unknown,” Wolfson said. “It also remains to be seen how many of the product preferences and shopping trends induced by the pandemic will persist once life returns to normal.”

He said Next’s “best guess” was that the consumer economy will be “healthier than many presume” during the short term, predicting that a combination of pent-up demand and an increase in savings will drive a spending rebound.

But he admitted “a big question mark” remained over the level of sales that stores will achieve once they reopen on April 12.

Wolfson has predicted a 20% slump in store sales in its new financial year, given the rapid shift to online shopping that has taken place during three national lockdowns.

Wolfson said: “The pandemic has served to accelerate a pre-existing social trend – the move to more online shopping. History has been given a shove and, having moved forward, seems unlikely to reverse.”