• H1 profit up 18.6% to GBP257.7m
  • Sales rise 10.3% to GBP1.85bn
  • Analyst describes performance as "stellar"
Next enjoyed its strongest sales growth for many years during the first half

Next enjoyed its strongest sales growth for many years during the first half

UK fashion retailer Next Plc has booked a double-digit increase in first-half profit, thanks to what it described as its "strongest sales growth for many years".

The company today (11 September) said profit after tax reached GBP257.7m (US$418.4m) for the 26 weeks to 26 July, compared to GBP217.3m in the same period of last year.

Total sales increased 10.3% year-on-year to GBP1.85bn from GBP1.68bn a year ago. Next Retail sales were up 7.5%, while Next Directory and Next Brand booked increases of 16.2% and 10.7% respectively.

For the first time in several years, the group's Retail division (including the effect of new space) contributed more to the growth of the company than its UK Directory business.

As well as making "good progress" extending its ranges, opening profitable new space, improving service and growing its online business, Next said external factors also played a part in contributing to growth.

"An improving economy, low interest rates, increasing availability of credit, less general discounting on the high street and much better summer weather have, we believe, all contributed to an improvement in our sales performance," it added. 

The Next Sourcing business, through which the retailer buys more than 40% of its products, had a "good" first-half, and has a strong order book for the second half. Sales in local currency were up 14%, broadly in line with the growth in Next Brand sales.

The company said its 4% sales growth forecast for the fourth quarter "may look
unambitious", but said the number needs to be taken in the context of the "very strong" sales performance in the final quarter last year.

Investec analyst Alistair Davies described the results as "stellar", but warned: "We note some caution in the outlook as the business laps a better trading environment, low interest rates and appetite for consumer credit in 2015."

Conlumino analyst David Alexander added: "Of course, Next's growth is unlikely to continue at such lightning pace indefinitely and these performances will lead to tougher comparatives going forward."

Click on the following links for further insight on Next's first-half performance: Next H1: What the analysts say and IN THE MONEY: Improved supplier capabilities benefit Next.