Profits soar as Next sees "strongest sales growth for many years"

 
Catherine Neilan
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Next: Retail outperformed Directory for the first time in many years
Next has experienced “its strongest sales growth for many years”, the retailer said this morning as it reported total sales up 10.3 per cent while pre-tax profit jumped 19.3 per cent.
Revenues at Next's retail arm rose 7.5 per cent to £1.08bn in the six months to the end of July, while its online and catalogue arm Next Directory soared 16.2 per cent to £694m. Next Brand rose 10.7 per cent to £1.77bn, with total sales reaching £1.85bn, up from £1.68bn last year.
Profits at Next Retail increased the most, up 22.6 per cent to £152.3m, while Next Directory rose 10.2 per cent to £172.1m. Pre-tax profit stood at £324.2m.
Shareholders will be happy – the retailer has returned £223m back through three special dividends, two of which were paid during the six months to the end of July. An additional £105m has been returned through share buybacks.
Despite its strong performance, in which retail contributed more than the Directory arm for the first time in many years, Next said it was “important for us to recognise that this performance is, in some part, down to external factors”.
An improving economy, low interest rates, increasing availability of credit, less general discounting on the high street and much better summer weather have, we believe, all contributed to an improvement in our sales performance. In addition, an improved housing market has helped our home business.We remain mindful that some of these factors are likely to be less favourable next year and this year's fine summer weather could present tough comparatives next year, when interest rates are also expected to rise.
We remain mindful that some of these factors are likely to be less favourable next year and this year's fine summer weather could present tough comparatives next year, when interest rates are also expected to rise.
Shares opened two per cent higher, but fell back to 2.7 per cent lower in early trading.