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LONDON (Alliance News) - Next PLC Thursday said that revenues and profit in the first half of the year were driven by a combination of more retail space and a rise in online sales, which continue to offset a fall in shop sales.
The clothing retailer raised its interim dividend by 16% to 36.0 pence and said that its operating profits came in at the top end of its expectations, up 7.2%, due to more full-price, rather than discounted, sales.
Next reported a 2.2% increase in revenue in the six months July 27 to GBP1.68 billion, and an 8.2% increase in its first-half pre-tax profit to GBP271.8 million from GBP245 million pounds a year before. It reported a net profit of GBP217 million, an increase of 14% when compared with a profit of GBP186.2 million a year earlier.
Next said that the difference in the speed of growth between sales and profit and sales reflects the differing performance of its full-price business versus markdown sales. It said that its brand full-price sales were up 3.9%, and it went into the summer-sale period with 18% less stock than last year. Markdown sales consequently 13% down on last year.
It said that it increased online sales through the NEXT directory by 8.3%, increasing its profit from online sales by 13% to GBP156.1 million.
Next said it has been developing its online business by improving its UK services, and investing in overseas markets. It said that active online customers increased year on year by 12% to 3.6 million, with international sales contributing 2.9% to online sales growth. As a result, it said that it has upwardly revised its estimate for full-year international online sales to GBP90 million from GBP75 million.
Next said that retail sales were down 0.9% on last year at GBP1.00 billion, although its full price sales were up 0.6% on last year, due to lower markdown sales, contributing to a 1.3% increase in its profit, to GBP124.3 million. It said that its new retail selling space added 2.7% to retail sales during the period, as it helped offset declining like-for-like retail sales.
The company said that for the full year, it expects its overall pre-tax profit to range between GBP635 million and GBP675 million pounds, on a brand sales growth range of 1.5% to 3.5%.
"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... we remain confident that we can deliver growth in sales, profits and earnings per share for the full year," said Chief Executive Lord Wolfson of Aspley Guise in a statement.
Next shares were trading 5.00 pence lower at 5,195.00p per share early Thursday.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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