Next's half year profits up 8.2%
Fashion and homewares retailer Next increased its pre-tax profits by 8.2% to £271.8 million in six months to 27 July as the retailer reduced its markdowns by 13%.
During the half year, Next’s total sales increased by 2.2% to £1.68 billion while operating profit rose by 7.2% to £285 million.
In a trading statement issued today, the group said the difference in profit and sales growth was largely down the differing performance of its full price business and markdown sales. While Next brand full price sales were up 3.9%, the retailer went into its sales with 18% less stock than last year and consequently markdown sales were 13% down on the previous year.
Although revenue in Next’s high streets shops dipped by 0.9% to £1 billion, Next Directory, which includes online and catalogue sales, saw its revenue increase by 8.3% to £597.6 million.
Profits at the high street stores edged up 1.3% to £124.3 million. Next directory profits climbed by 13.4% to £156.1 million.
Next continued to add new space to its store portfolio during the period and increased its total trading space by 145,000 square feet. The retailer said the new space was highly profitable, making 22% net margins, before central overheads.
The retailer has identified 1.4 million square feet of additional space that it would like to open over the next five years. It currently plans to open around 300,000 sq ft during this financial year, another 450,000 sq ft in the year ending January 2015, and the same again in the following year.
Next said its international sales had taken a step forward in the last six months and contributed 2.9% to the growth of Next Directory. Therefore, the retailer has upwardly revised its estimate for full year international online sales from £75 million to £90 million.
Next chief executive Lord Wolfson of Aspley Guise said: "The group has made good progress in the first half, delivering profits at the upper end of our expectations. Looking ahead the economy looks set to improve moderately, albeit at a slow pace and with the risk that credit easing may not translate into growth in real earnings.
"We remain confident that we can deliver growth in sales, profits and earnings per share for the full year."
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