Next profits up despite fall in like-for-like sales
Fashion retailer Next has reported a 3.65 per cent rise in first-half profits, exceeding analyst expectations.
The high street home and clothing chain revealed that pre-tax profits for the six months to July 2006 were £178.9 million, compared to £172.6 million during the same period last year.
An increase in sales through the company's home shopping business Next Directory and its website compensated for disappointing first-half sales across its Next Retail stores, where like-for-like sales across outlets that had traded continuously were down 7.5 per cent over the period, slashing Next Retail profits by 7.9 per cent.
However, overall Next Retail sales were up 4.1 per cent on last year as a result of new store openings, with the company having opened 18 new shops during the first-half, adding an extra 230,000 square feet of sales space to its portfolio, which now incorporates 457 outlets.
Meanwhile, the retailer revealed that Next Directory sales were up 15.3 per cent during the first half, "mainly driven by increased numbers of active customers" using the home shopping business.
The company said that Next Directory profits were up 44.7 per cent on last year, with the average number of active customers during the first-half up 8.6 per cent on the same period in 2005.
Next said that a growing number of customers were opting to use its website to order goods, with 45 per cent of Next Directory sales now made online.
"An excellent performance in Next Directory combined with good cost control across the group more than compensated for a disappointing performance in Next Retail," the company said in a statement accompanying its first-half results.
Next added that its first-half dividend payment to investors increased by 10.7 per cent to 15.5 pence a share, while earnings per share rose 11.3 per cent to 53.3 pence, largely as a result of a series of buy-backs.
Commenting on the results, Next chairman John Bolton said: "We believe that a clear focus on the design, value and efficient delivery of our products, both through our stores and the Next Directory, continues to be the strategy which will deliver the best returns to our shareholders."
"I have been impressed by the resilience Next has shown in producing these results. I am confident that the management team is well prepared to face the challenging market conditions which lie ahead," he added.