Next recorded an increase in sales and profits despite a fall in like-for-like sales in the first half.

Sales rose 4.8% to £1.6bn while profit was up 10.2% to £251m in the half year to July. However, like-for-like sales were £18m less than in 2011 and are projected to be £39m down at full year.

Next said performance since the end of the half has been disappointing due to an “unusually quiet” August and September.

The retailer said growth in its online business, the addition of profitable new space and good cost control “more than offset” the negative impact of the decline in retail like-for-like sales. Next said it will improve its delivery offer, introducing new initiatives such as same day delivery.

Profit in its Directory division rose 22.1% to £137.7m while its retail business nudged up 0.2% to £122.7m. Online sales added £26m of profit while new space added £14m.

The company has set a target for new stores to make profit contribution of 15% and pay back the net capital invested in two years.

Chief executive Lord Wolfson said: “August and early September sales have been disappointing during what has been an unusually quiet period. We remain cautious about the economic outlook whilst maintaining full-year guidance that our sales, profits and earnings per share will all move forward on last year. 

“Disappointing sales in an unusual August and early September reinforce the wisdom of this conservative approach.”

Wolfson called for a relaxation in Sunday trading laws in the run-up to Christmas. He said: “Given the unusual trading patterns during the Olympics the data is very hard to interpret. On balance, our view is that additional trading hours will be most beneficial on the busiest Sundays. 

“We would welcome some relaxation of Sunday trading laws, particularly in the run-up to Christmas when shoppers are most pressed for time.”

The company said it would roll out the home and garden format trialled in Ipswich and Shoreham which had “comfortably beaten their targets”. It has identified 17 sites to bring the concept to in the next five years although the third new-format store in Warrington will open later than original planned, due to a fire, in February 2013.

Wolfson added: “If the economy had a weather forecast the outlook would be overcast - patchy rain for the foreseeable future. In the run-up to the credit crunch individuals, businesses and government lived beyond their means. 

“It will take some time to work our way back to affording the lifestyle to which we became accustomed.”

Next said space growth had been “slower than expected” in the current year as obtaining planning consent held up new store growth.