Fashion giant Next has reported a 8.5% rise in first-half profits and signalled an end to price inflation.
The retailer made an interim profit of £228m on sales up 3.6% to £1.57 bn in the period to July, when Directory revenues and profits offset tough conditions for its stores.
Next chief executive Lord Wolfson said Next had proved resilient during a “perfect storm” for retail, when commodity prices surged and consumers’ income was squeezed.
But he was confident of continued success and saw signs of relief from some pressures.
Wolfson said: “Early indications are that retail headwinds are likely to ease as we move into 2012. We have strong evidence that there will be little or no inflation in our own prices and it seems probable that other inflationary pressures will ease as commodity price rises begin to annualise in the first quarter of 2012.”
Wolfson said that Next had succeeded by making available appealing fashion and mitigating cost price inflation, adding profitable new space such as Home stores, leveraging the strength of the Directory business and careful cost management.
Sales at Next Retail, excluding VAT, fell 1.8% in the half to just over £1bn and profit was flat at £122.5m. Directory sales rose 15.1% to £486.7m to deliver a profit of £112.8m.
Wolfson said he expects Next to deliver full-year profits growth of between 0.4% and 8.7% on sales ahead by between 2% and 4.5%.