Fashion retailer Next saw total sales rise 3.2 per cent year-on-year in the 26 weeks to July 30th 2011 with the company’s Directory business the main driver of growth, according to a half-year trading statement published today.
Next Directory, which comprises its home shopping and online channels, reported a 15.1 per cent rise in trading compared to the same six-month period one year ago – well ahead of the retailer’s store network which experienced a 1.7 per cent decline.
Adjusting for the last month’s sale of customer services operation Ventura, Next expects full-year profits forecasts to be in line with previous guidance, ending the 2010/11 fiscal period between £527 million and £577 million.
Like the majority of retailers on the UK high street Next has been offering discounts and promotions to shift end-of-season stock in recent months.
Commenting on the Next Sale, today’s statement said: “The Directory figure is somewhat flattered by an increased allocation of Sale stock to Directory, full-price sales for Directory were up 13.3 per cent.
“Overall stock for the End of Season Sale was up seven per cent, broadly in line with the five per cent increase in VAT inclusive sales to customers. Clearance rates have been in line with our expectations and marginally ahead of last year.”
Towards the end of 2010 Next CEO Simon Wolfson was one of the first leading retail bosses to admit that flat like-for-like sales were set to be the norm for 2011, and spiralling material costs combined with low consumer sentiment have proved him correct in many ways.
In Next’s statement today the company predicted similar trading conditions between now and the end of the year, before the situation improves in 2012.
“We expect the cost price inflation experienced in the first half of 2011 to continue into the second half at broadly the same rate of plus eight per cent,” it said.
“2012 looks like it will be a more benign year for cost price inflation. The combination of a sharp reduction in cotton prices, an easing of manufacturing capacity constraints in the Far East and the annualising of this year’s VAT increase all mean that selling prices are unlikely to rise further for spring 2012.”