Fashion favourite Next has posted positive first-half results contributing to growing indicators which suggest recovery for the retail sector is in full swing.
During the six months to July 2013, pre-tax profits climbed by 8.2 per cent to £271.8 million. Total revenue, meanwhile, rose by 2.2 per cent to £1.68 billion, giving the retailer an excellent opportunity to strengthen its financial base in time for Christmas trading.
Of course, internet sales from the Next Directory played a huge part in the successes of the first half, with a total sales rise of 8.3 per cent contributing £597.6 million to the overall total. However, high street fashion enthusiasts will be pleased to learn that Next increased its commercial space significantly during the first six months of the year – and this added 1.8 per cent to the total sales figure.
The significant profits increase is largely due to the fact that full-price sales jumped by 3.9 per cent, reversing the trend of consumers snapping up sale items during the recession. This allowed the retailer to go into its summer sale with 18 per cent less stock offered at reduced prices, greatly aiding margins.
Chief executive Lord Wolfson remains cautious about the consumer atmosphere but is confident that Next will be able to meet targets during the second half.
He says; “The group has made good progress in the first half, delivering profits at the upper end of our expectations.
“Looking ahead the economy looks set to improve moderately, albeit at a slow pace and with the risk that credit easing may not translate into growth in real earnings.
“We remain confident that we can deliver growth in sales, profits and earnings per share for the full year.”
With regards to the second half, the hot summer weather certainly got things off to a good start as consumers stocked up on items such as shorts, t-shirts and flip flops. However, as the good weather continued on to the launch of its autumn line in August, sales flagged slightly as the majority of summer stock had, by that point, flown off the shelves.
A more buoyant housing market during the past quarter has greatly aided sales in Next’s home products business – a trend which the retailer hopes will continue in the run up to Christmas. However, with high inflation keeping real earnings down, it is entirely possible that the autumn clouds will blanket the successes achieved during the retailer’s moment in the sun.
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