Next has increased its profit guidance for the full year after sales in August and September exceeded expectations.
The retailer now expects full-year profit before tax to be up by £10m to £727m, despite what it described as “volatile” trading conditions subject to powerful headwinds.
Pre-tax profits at Next rose by 0.5% to £311.1m in the six months to the end of July and Next brand full-price sales were up 4.5%. Total sales, including markdowns, were up 3.9% on the same period last year.
In store sales for the six months fell 6.9% year on year, while online sales were up 16.8% compared to the same period in 2017.
Sales at Next’s Label business were up 24.2%, driven by increasing sales with existing partner brands and introducing new brands.
The business said in the year to January 2019, it anticipates partially offsetting cost increases of £55m with cost savings of £43m.
The retailer also outlined its preparations for a no-deal Brexit, pointing to tariff and duty increases and a potential reduction in the value of sterling as two key challenges. Next also called on the government to clarify its intentions on tariff rates in the event of a no-deal Brexit.
It added that while there are “significant challenges” involved in preparing for a no-deal outcome it does not believe that the “direct risks of a no-deal Brexit pose a material threat” to the ongoing operations and profitability of Next in the UK or the EU.
Traditionally known for only having two end of season Sales per year, Next launched a mid-season Sale last weekend and is discounting by up to 50% off many items.