Next: It's a recession, not Armageddon

Next enjoyed a better than expected first half - but says it isn't out of the woods yet.

by
Last Updated: 06 Nov 2012

Next has increased its annual profits forecast for the second time this year, after reporting better-than-expected first-half results. The fashion retailer today reported that profits for the six months to July 31 rose by 7% to £185m, while total sales were up a smidgen to £1.5bn. Next also said the decline in like-for-like sales (which were down 1.2% on the same period last year) was easing, but would probably remain negative until the middle of next year. Still, all things considered, Next is looking pretty ship-shape – particularly compared to some of its rivals...

Unlike some competitors, Next has managed to steer clear of big price-cuts in its stores, enabling the top line to keep on growing. CEO Simon Wolfson also put the cheery set of results down to good summer weather (which, conversely, was blamed by the BRC this week for the poor retail performance in the capital), plus a slight improvement in consumer confidence and new, more fashionable ranges. Despite this, he remained typically downbeat about Next’s prospects over the coming months, warning that 2010 was going to be tough given the inevitable public spending cuts and tax hikes.

Wolfson certainly appears to have more to smile about than the top brass at Inditex: the parent company of the Zara fashion chain said today that profits fell 8% in the first half of this year – though admittedly overall sales were up 9%, thanks largely to its new shops in Asia. With customers less willing to spend in the West, it’s relying on these Asian territories to save its bacon.

According to Next’s Wolfson, however, the impact of the financial crisis on the high street has not been as bad as many feared. ‘It’s been a recession, not Armageddon,’ he said today, in the manner of a man who thinks lunch is for wimps. And it’s certainly true that things are looking rosier for Next than they have done in a while. In the run-up to Christmas last year, the retailer was taking a battering thanks to the plunging pound and poor sales. This time round, Wolfson will probably be rather looking forward to it. Unlike those of us who find the idea of 2am queues a bit bizarre...


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