Next reports 2014 profit near top end of range on improving economic fundamentals

British clothing retailer Next reported 2014 pretax profits up 7.2%, which is at the top end of its range, as the group benefited from improving consumer confidence.Group store and online pre-tax profit rose to £782.2m from £695.2m, which is at the top end of expectations set in December when group said that it expected full-year pre-tax profit to be between £765m and £785m.Sales rose to £4.03bn from £3.76bn in the year to the end of January.However, the group noted that 2014 was a year of two very different halves. Next's brand sales in the first half were exceptionally strong, up 11%, whilst the second half was relatively disappointing, up just 5%.The group said the pretax profits were flattered by 1.3% as a result of a £9m accounting profit on currency instruments, which is unlikely to recur in the year ahead.Strong cash generation enabled Next to buy back 1.4% of the shares outstanding which, along with the effect of buybacks in the previous year, meant that underlying earnings per share grew by 14.7%.It returned a further £223m to shareholders through three special dividends of 50p each, meaning ordinary dividends for the full year will increase by 16.3% to 150p.Looking ahead, chief executive Lord Simon Wolfson said the economic outlook for the UK consumer looks benign. "Low price inflation, an end to real wage decline, healthy credit markets and strong employment all paint a more positive picture than in recent years," he added.Next however has noted weakness in some of their product ranges and in response, lowered its budget for full price sales growth in 2015/16 to a range of between 1.5% and 5.5% from between 2.5% and 7.5%, with the first half expected to perform at the lower end of the range.Wolfson added that "whilst the prospective returns detailed above would be very respectable by most standards, they are low by comparison to Next's historical performance."