Next has grown its pre-tax profit by 19.3% to £324.2m in the six months to July, the retailer has announced.
The retailer said it had “experienced its strongest sales growth for many years” as it reported total sales grew 10.3% to £1.85bn in the six months to July 26, with revenues growing 7.5% across stores and 16.2% across its online directory.
Profits for the retail arm grew 22.6% to £152.3m and the Directory grew by 10.2% to £172.1m.
New retail space contributed 2.4% to growth, while existing retail space contributed 2.3%. The UK Directory contributed 3.2%, the overseas Directory 2% and Label just 0.8%.
Next noted that for the first time in several years, its retail business (including the effect of new space) contributed more to the growth of the company than its UK Directory business.
The retailer’s operating profit rose 19% to £339.1m, while its earnings per share grew 22% to 173.3p.
Announcing the results the retailer said it was aware that its success is down in some part to an improving economy and retail market so noted: “We remain mindful that some of these factors are likely to be less favourable next year and this year’s fine summer weather could present tough comparatives next year, when interest rates are also expected to rise.”
Looking at its fashion offer, Next said that going forward it was focused on being “more ambitious in the authenticity with which we execute our design team’s vision of future ranges”. It added: “We can also do more to respond to the important new trends which emerge only a short time before the season starts. This will require the development of new practices and better relationships with quick response suppliers, so that we can delay purchasing decisions without risking late deliveries or compromised quality.”
This year Next moved from a two season cycle to buying four distinct seasons: spring, summer, autumn and winter to ensure ranges are more weather-appropriate.
For winter this year, it said it has stretched its price architecture to include premium products which the retailer said will become more apparent as the year progresses, particularly in the Directory.
Next said its large store format, first opened in Shoreham in 2011, is becoming more important to the group and this year will account for around 70% of net new space. By the end of the current year Next will have relocated and expanded shops in Skipton, Bath, Northampton and Bolton.
During the last six months Next has begun trading online through its Directory in 11 new territories including Cyprus, Malta, Saudi Arabia, Belarus and China, of which it said China presents the most interesting opportunity.
Next added that it intends to open a local warehouse hub in Northern Ireland to enable it to offer next day delivery in both Northern Ireland and the rest of Ireland. It also plans to open a second overseas distribution hub during 2015/16 which is likely to be located in Eastern Europe.