Retail division remains flat, but Directory business on the up
Fashion giant Next revealed operating profit climbed 11 per cent in its first half, with strong growth in its Directory business, although it posted flat results for its Retail arm.
Net income rose 14.3 per cent on the previous year, from£124 million to£141.7 million. Next Directory revenue, excluding VAT, increased to£371.8 million against£359.4 million last year. However, revenues at Next Retail slid fractionally to£1.03 billion.
Next said that it set out at the beginning of the year to improve retail like-for-like sales performance by revitalising the Next brand.
It maintained that the process of making its ranges more aspirational has started, including the roll out of a new shopfit. Like-for-like sales in its core chain were still in negative territory, but improved from -7.2 per cent last year to -3.6 per cent in the face of a worsening retail environment.
While reporting negative like-for-like sales figures for its Retail business, operating profit increased through margin improvement and operational cost savings.
International sales at Next's franchise partners jumped 15 per cent to£25 million. It opened an additional 13 stores, taking its overseas total to 142. The largest region remains the Middle East in terms of store numbers and sales. During the period, shops opened in five new countries – China, Jordan, Pakistan, Poland and Ukraine. A further 14 stores will open by January next year.
Next remained cautious about the consumer and warned that the full effect of recent interest rate rises has not yet filtered through to customers.
However, the retailer was satisfied that improvements to ranges, marketing and stores have been implemented and the Retail division's like-for-like sales performance is budgeted to improve in the second half and fall within a range of -3.5 per cent to -1 per cent. It is budgeting for Directory second-half sales to come in at between -2 per cent and +2 per cent on last year.