High street fashion retailer Next today reported a profit rise of 10.2 per cent to £251 million for its half year, despite a like-for-like (LFL) sales decline over the period.
First half revenue to July 28th 2012 rose 4.8 per cent to £1.6 billion and the retailer said in a statement that it “has made a better than expected start to the year.”
Costing the company £18 million in profit, the expected LFL decline was offset by “new profitable space”, which added £14 million to the retailer’s profit while online sales growth added a further £26 million.
Next Directory sales jumped 22.1 per cent compared to the same period last year to £137.7m, driving sales for the retailer which had been negatively affected by unpredictable weather over the summer months.
“Growth in our online business, the addition of profitable new space and good cost control more than offset the negative impact of the decline in retail like for like sales,” Next CEO Lord Wolfson said.
Multichannel then, remains a firm proposition for the retailer during a turbulent period for the UK high street and James McGregor, Director of the retail consultancy Retail Remedy, believes that this “remarkable success” is down to its focus on core strengths.
He commented: “Few of its rivals have the strength and depth in sales channels that Next does.
“Its Directory range complements rather than apes the lines in the physical stores.
“The Directory has performed exceptionally well, with its profits surging by more than a fifth in a year.
“Next pioneered the multi-channel approach that its high street rivals once sneered at, but are now scrambling to copy.
“An approach that was once innovative is now beginning to look inspired.”
In bricks & mortar terms, the retailer opened a large concept store in Ipswich in July following the opening of such a store in Shoreham last year and both units have “comfortably beaten their targets”, according to Wolfson.
A third store in Warrington is set to open in February 2013, having been delayed due to a fire and a further 17 similar sites could open over the next three to five years depending on planning consents.
While it is soon to accurately predict space growth next year, the company said, it anticipates adding at least another 250,000 sq ft to its portfolio.
Wading in to the ongoing debate surrounding Sunday trading laws, which were relaxed during the Olympic Games to cater to the high number of customers, Wolfson explained that it had had a generally positive experience over the period and “would welcome some relaxation of Sunday trading laws, particularly in the run up to Christmas when shoppers are most pressed for time.”
Looking ahead, the retailer pointed to the continuing troubled economy as reason for caution.
Wolfson explained: “We remain cautious about the economic outlook.Disappointing sales in an unusual August and early September reinforce the wisdom of this conservative approach.
“We are on track to meet market expectations and maintain the full year financial guidance given in our August trading statement, with sales, profits and earnings per share all moving forward on last year.”