NEXT yesterday said there was a chink of light amid the retail gloom as it forecast a pick-up in sales in 2012.
The retailer said there had been a “perfect storm” in 2011 with customers squeezed by surging energy bills, the slowdown in government spending and a hike in VAT.
However, pre-tax profits for the six months to 30 July rose 8.5 per cent to £228m.
Next said prices were seven per cent higher in the first half and would be eight higher in the second, but with the cost of cotton falling prices would stabilise.
Chief executive Lord Simon Wolfson (left) gave an upbeat forecast for next year but warned that the Eurozone sovereign debt crisis was a variable which could still derail any recovery.
He said: “There are indications that 2012 will not be as challenging. We have negotiated a third of our prices for our spring collection and are confident that we will see little or no inflation in our selling prices in the first half. The cotton price bubble has collapsed.”
Next Directory saw a 15 per cent rise in sales and an 11 per cent increase in profits in the first half of the year. That contrasted with a 1.8 per cent fall in overall retail sales.
Wolfson said that sales among young customers, particulary with its Lipsy brand, were suffering as they were faced with debt from university fees and difficulties in finding work.
Nevertheless, Next said it now expects profits for the full year to be around £590m, up from the £577m it previously forecast.
The group said it expects to open another 400,000 sq ft of retail space, in the second half of the year with another 400,000 sq ft expected next year.
The firm raised its interim dividend by 2.5p to 27.5p and will pay shareholders on 3 January.