British multinational retailer Next revealed today it had enjoyed record sales in its last financial year, but it also outlined the impact of Russia's invasion of Ukraine on current trading.
The group said it expects to lose £65million of sales and £18million of profits this financial year after closing its websites in Ukraine and Russia in early March.
It added: "For clarity, we had no retail stores or franchise partners in either country. We have assumed we will remain closed in both countries for the rest of the year."
The company's results for the year to January show sales of £4.861billion - an increase of 34.1% on 2021 and 11.5% on 2020.
Pre-tax profits reached £823.1million - a rise of 140.4% on last year and 10% on the year before.
Chief Executive Lord Wolfson said: "We have navigated our way through the pandemic and the structural changes affecting our sector to deliver record sales and earnings per share. We acknowledge that we have been fortunate.
"We went into the pandemic with a well-established online business and a diverse product offer. This allowed our online business to make up for much of the sales we lost in retail, and accommodate the dramatic shift in sales between different product categories experienced during lockdown."
Next said last year had exceeded all its expectations.
The company added: "In the first quarter, during lockdown, we made up for much of the lost retail sales through online sales, particularly homeware and children's clothing.
"In the second half, despite stock shortages, we were able to scale up online operations to meet pent-up demand for adult clothing.
"We believe that the second-half performance was, in a large part, fuelled by the release of consumer savings accumulated during lockdown."
Next said the buoyancy of its sales last year, along with the benign economic environment that accompanied it, make comparatives in the year ahead challenging.
It went on: "Last year's strength contrasts with this year's unusually-high level of geopolitical and economic uncertainty. The combination of these factors make accurate guidance particularly difficult.
"In our January trading statement, we set out the reasons for taking a more cautious approach. We highlighted five big uncertainties which tempered our expectations. These were: The unwinding of pandemic savings; a return to spending on travel and leisure; inflation in competing essential goods; inflation in Next's selling prices; and likely increases in UK taxes and mortgage rates.
"At that time, we had not contemplated that a war in Ukraine might add to the cocktail of uncertainties."
The group added that, weighed against these negative factors, nominal wage inflation is running at 4.8% and UK employment rates remain strong.
"It is difficult to draw too many conclusions from sales this year in January, February and March, because our stores were shut for the entire period last year. So far this year, UK sales are ahead of where we expected them to be, mainly driven by better-than-anticipated sales in our retail stores.
"We are also seeing a very sharp reversal of lockdown fashion trends, with a return to more formal dressing and notable reduction in spending on home and very casual clothing.
"After accounting for the combination of the loss of £18million of profit from the closure of our Ukrainian and Russian businesses and better-than-expected sales in the UK, we are reducing our central profit guidance for the full year by £10million to £850million - a reduction of 1.2%."
The UK's main share index, the FTSE 100, was trading up seven points at 7,467 shortly after opening this morning. It finished yesterday down 16 points.
Brent crude futures were up 0.32% at $121.99 a barrel.
Companies reporting today
Final results: Next, Arbuthnot Banking Group, Atalaya Mining, Bonhill Group, Bridgepoint Group, Eve Sleep, Robinson, Secure Trust Bank, Sopheon, Starwood European Real Estate Fin, Venture Life Group, WAG Payment Solutions
Interim results: CVS Group