Fashion retailer Next is expected to post a slight increase in profits at its interim results on September 11, although first-half like-for-likes could be down as much as 6 per cent.

The retailer has already given guidance of a like-for-like decrease of between 1 per cent and 4 per cent for the first half, but Seymour Pierce analyst Richard Ratner said it could be worse. He believes that trading has not been good and that the weather has affected sales – as is the case with almost all clothing retailers.

Ratner said that the second half would be key. “We’re looking for like-for-likes to reverse in the second half and for a bearish comment about sales going
forward,” he said. “We must bear in mind the weather and that
it will take a while to bring customers back.”

Despite the likely drop in comparable store sales, Ratner maintained the outlook was more positive for Next. He pointed out that the retailer has a habit of producing better-than-expected figures and cost savings and that increased gross margin could cushion the results.

“Importantly, the merchandise is superb at present and we have said for a while that the autumn/winter range would be the turning point in Next’s fortunes,” said Ratner. “Also, the improved shop fit will help. One commentator said that the new shop fit was like River Island 18 months ago and Next should be pleased with that.”

Next began an overhaul of its product and branding earlier
this year. The group posted improved trading for the seven weeks to March 17, when like-for-likes fell 0.3 per cent, compared with a 7.2 per cent fall last year.

Next has invested£76 million in fashion stock for spring. A fresh store design, with large graphics and chrome fixtures, was unveiled at Bluewater, Kent in May. The retailer also outlined plans to refit 21 per cent of the portfolio by the end of this year at a cost of£97 million.