Next is following retailers such as Marks & Spencer, Debenhams and Austin Reed, which either already have a presence in India or are preparing to open shortly. Indian company Planet Retail Holdings is Next's partner.
According to Indian sources, as many as 20 Next stores are in the pipeline. However, a Next spokesman would only confirm that two or three are planned in this financial half-year and more may follow, depending on the venture's success. 'We've got a good franchise partner that wants to open stores. The risk is always with the franchise partner,' he said.
The Indian retail market is growing by 10 per cent a year, but leading store groups only account for 3 per cent of sales at present. Growing affluence and a youthful population offer enormous opportunities and are attracting a growing number of overseas players.
Ernst & Young director of retail Tim Sleep said: 'The UK is a very mature and competitive market. India represents opportunity in the long-term and there's an advantage to be gained from being an early mover.'
Details of Next's Indian venture emerged as the retailer reported interim operating profit up 5.8 per cent to£191.7 million, despite what the retailer described as 'very difficult trading conditions'.
Like-for-like sales at the Retail division fell 7.5 per cent for the period. Net operating margin also fell from 12.2 per cent to 10.8 per cent, because of increased costs and markdowns.
However, at the Directory business, sales rose 15.3 per cent and net operating margin was up 3.4 per cent to 16.6 per cent. The group said increased economies of scale led to margin improvements, while a rise in the number of active customers made sales rocket.
Next chief executive Simon Wolfson said that 'a step up in competition, fragile consumer confidence and retail ranges being over-optioned' had all contributed to the Retail arm's underperformance compared with Directory.
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