Next chief sees housing bubble danger ahead

Kasmira Jefford
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THE CHIEF executive of Next warned yesterday that improving mortage availability and government measures to boost activity in the housing market could result in an “unhelpful house price bubble” as the retailer reported strong half-year sales growth.

Lord Simon Wolfson, a prominent supporter of the Conservative Party, said house price inflation “was as dangerous as any other type of inflation” and must be converted into house building to translate into any meaningful underlying growth.

He added that while the “credit squeeze” appeared to be over, a decline in real earnings continued to put the brakes on a wider consumer recovery.

“While there is some relief in the economy, I think it would be a mistake to characterise that as a full blown recovery because a recovery will require growth in real earnings not just more borrowing,” he said.

Lord Wolfson’s cautious comments came as the retailer posted an 8.2 per cent rise in first-half profit to £271.8m, driven by new store openings and a strong performance from its online Directory business.

The FTSE 100 group, which runs over 500 stores in the UK and Ireland and 200 overseas, said retail sales fell 0.9 per cent in the six months to 27 July while Directory sales rose 8.3 per cent.

Total sales increased by 2.2 per cent to £1.7bn.

It maintained its full-year guidance for sales growth of 1.5 per cent to 3.5 per cent while also raising its interim dividend by 16.1 per cent to 36p.