Next reported a 12.5% rise in underlying pre-tax profits to £782m for the year to January 31, but remained cautious about the outlook for 2015 and 2016.
Total sales were up 7.2% to £4.03bn, but the retailer said it was a “year of two halves” with brand sales increasing 11% in the first half and 5% in the second half.
Chief executive Lord Wolfson said: “The economic outlook for the UK consumer looks benign. Low price inflation, an end to real wage decline, healthy credit markets and strong employment all paint a more positive picture than in recent years. We remain very cautious in our sales budgets. Whilst we are happy with most of our current product ranges, we recognise that some collections are not as strong as they were at this point last year.”
He continued: “In addition, during the spring and summer seasons, we face very tough comparative numbers from last year, when sales were assisted by unusually warm weather. There is a potential upside in the second half as the comparative performance last year weakens, particularly in the third quarter.”
Due to the weakness in some ranges Next has lowered its budget for full-price sales growth in 2015/16 from between +2.5% and +7.5% to a range of +1.5% to +5.5%, with the first half expected to perform at the lower end of the range.
Next said it was continuing to develop a “small amount of product much closer to the season, using shorter lead-time territories and quicker-response suppliers”.