Directory arm saves the day

HOW does Next do it? As a mid-market retailer with a presence in most town centres, you’d expect it to be suffering from the gloom on the high street, not bucking it.

It is Next’s catalogue and internet business, Next Directory, that has proved the firm’s saviour, providing exposure to both the surge in online retail sales as well as more buoyant markets overseas.

Sales excluding VAT in Next’s Retail division – essentially all the physical stores – actually fell 1.8 per cent during the first half. That puts it in line with most of its peers and significantly behind some others, such as John Lewis.

Next Directory, however, grew sales by 15.2 per cent over the same period. International directory sales jumped to £32m from £10m in the same period last year.

Since 1997, when Next Directory sales were £208m a year, the division has gone from providing around a third of what the shops brought in (£639m) to around a half today (£935.5m compared to £2.2bn). That trend will only accelerate.

So there will be much talk about how Next’s results provide hope for the high street, but the real story is the growth in shopping from home – especially online.