Next will focus on a long-term online growth strategy in China rather than opening standalone stores, according to chief executive Lord Wolfson.
The company began trading online in China during the first half of this year and although the launch was “successful”, Wolfson remains realistic about the impact sales from the country will have on turnover during the next three years.
“People often expect far more than what they actually get from China in the first couple of years. It represents a great opportunity for us but we are making sure we get the logistics right before we make a big push with it. We won’t expect it to make a big impact on sales in the next three years,” he said.
Wolfson said unlike other UK companies including Tesco and Kingfisher, Next would not open stores in China and does not intend to find a Chinese partner to help it grow.
“It takes time to get it right but we would rather do it ourselves. Other UK retailers have taken on partners but they are interested in opening stores there, that is not our intention,” he added.
Next grew pre-tax profit by 19.3% to £324.2m in the six months to July 26. It said it had “experienced its strongest sales growth for many years” as it reported total sales grew 10.3% to £1.85bn in the first half, with revenues up 7.5% across stores and 16.2% across its online Directory business.
Profits for the retail arm grew 22.6% to £152.3m and the Directory grew 10.2% to £172.1m.
However, the company remains cautious of a rise in interest rates next year.
Wolfson said: “There is a risk to Next as our customers tend to have kids and mortgages and a rise in interest rates will moderate our growth. It won’t derail the wider economic recovery in Britain but it is an important factor that we should be aware of next year.”