Next pretax profits fall by 9.5%
Retail chain Next has delivered a “modest” upgrade to its full-year outlook after an “encouraging” performance amid tough high-street conditions.
The fashion group posted a 9.5 per cent fall in pretax profits to £309.4 million (€348.2 million) for the six months to the end of July after total sales across its high-street stores, including markdowns, fell by 8.3 per cent.
But chief executive Lord Wolfson said that, while it was a challenging first half, improved trading in the second quarter suggested efforts to overhaul its ranges were beginning to pay off.
He said the worst of the Brexit-fuelled price rises on the high street were also over.
A prominent Leave campaigner, Lord Wolfson said 2018 would see an end to price rises, with the group predicting stable prices in the autumn.
Lord Wolfson added that the benefit of the weak pound will start to be felt next year as it boosted exports.
“The bad news will be this year and the good news next year,” he said.
Next is forecasting full-year profits of about £717 million, up from £710 million previously, although this would still mark a drop on the year before.
It said sales could fall by up to 2 per cent or rise by 1.5 per cent over the year, having previously warned of a fall of up to 3 per cent.
Lord Wolfson said: “The first half of the year has been difficult and sales and profits are in line with our cautious expectations. However, our performance in the last three months has been encouraging on a number of fronts and, whilst the retail environment remains tough, our prospects going forward appear somewhat less challenging than they did six months ago.”
Next has been helped by the warmer weather in the summer, together with an overhaul of its product ranges and online offering, which helped total full-price sales rise by a better-than-expected 0.7 per cent in its second quarter to July 29th.