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Next delivers first-half pre-tax profits of £185.5m

Next has raised its annual earnings forecast after delivering a 6.9% rise in first-half pre-tax profit to £185.5m.

The upgrade is the third in five months and comes as the retailer hailed better product lines and an improvement in consumer confidence.

Next expects annual profit to come close to last year’s £429m.

The retailer added that while like-for-like sales declines had been easing - down by an underlying 1.2% in the six months to July - they were set to remain in negative territory through to spring 10.

Total first-half sales rose 0.8%, while sales from the firm’s Directory arm were 1.7% higher than last year. Retail profit increased by 4.4% in the first half, with net operating margin 0.4% higher at 11.2%.

Next chief executive Simon Wolfson said: “To an extent this sales performance has been the result of a slight improvement in the consumer environment and favourable weather. We also believe that our ranges have improved and in particular we have increased the fashion content through earlier adoption of new trends.”

Wolfson added that because of the fall of Christmas on a Friday this year, Next would move its Sale forward to Boxing Day Saturday to avoid the first day of its end of season Sale falling on a Sunday. Wolfson said this will “increase the costs of the Sale and we believe may have a negative impact on clearance rates”.

He said Next remains highly cash generative and will continue to invest in 2010, despite the weak consumer environment.

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