• Profit before tax grew 8.2% to GBP271.8m
  • Revenue grew 2.2% to GBP1.6bn
  • Retail sales fell 0.9% to GBP1bn

UK clothing retailer Next has recorded an increase in first-half pre-tax profit, driven by online sales growth.

Profit before tax grew 8.2% over the six months ended 27 July to reach GBP271.8m (US$430.1m), up from GBP251.3m in the same period last year. Revenue grew 2.2% over the period to GBP1.6bn.

Over the half, the group's retail division saw revenue fall 0.9% to GBP1bn, while Next Directory, which includes e-commerce, saw sales increase 8.3% to GBP597.6m.

The company said that in recent years it has experienced much greater sales volatility, with consumers spending closer to the point at which they need new clothing.

"This explains why sales were particularly strong during July when the weather became much warmer. However, during August the warm weather worked against some of our clothing ranges," it said.

"This was partly as a result of selling out of summer weight stock in July, but mainly because we did not plan enough warm weather transitional stock for the launch of our autumn ranges after the July end-of-season sale."

Next now believes there is an opportunity to sell more transitional stock in the early weeks of the spring and autumn seasons.

Over the half-year, full-price sales increased by 0.6%, while markdown sales declined 13.5%.

Conlumino fashion consultant Anusha Couttigane said that the relatively flat sales show Next's current season stock is selling well, indicating the positive impact of a more risk-taking approach to its ranges.

"The company's trading statement outlined its underlying ambition to be more trend-led, with a new focus on collection design. Whilst Next can still afford to accelerate its uptake of fashion trends, its conscious effort to do so has already seen an improvement in clothing sales," she said.
"What appears to have let Next down slightly are flaws in its forward planning. The company admits a need to improve the process of buying fabric and, crucially, investing in greater quantities of key fabrics earlier in the buying cycle.

"What this betrays is a ‘safe' approach to fashion, and safe fashion can often translate as boring to the shopping mindset rather than exciting consumer interest. Identifying key fabrics in advance should be common fashion sense and this is something Next will have to work on."