Profits up at Next

Next has revealed first-half pre-tax profit up£178.9 million, bolstered by a strong performance at the chain's Next Directory business and stringent cost control across the group.

Turnover at Next Directory was£359.4 million against£311.8 million, in the comparable period.

However, the high street retailer felt pressure from competition such as Marks & Spencer and like-for-like retail sales fell 7.5 per cent. Current trading was more positive and retail like-for-like sales over the first six weeks of the second half were ahead 0.3 per cent.

Total sales jumped 8.1 per cent to£1.51 billion.

The retailer has been focusing on range - reducing it by 10 per cent - and revamping existing stores. A new store model, which is being tested in three stores, has lifted sales 8 per cent in those stores.

However, Next said: 'We expect these sales uplifts to be short term and it would be unwise to assume there will be any long-term uplift in sales as a result of the refit programme.'

Investec analyst Mark Charnock said: 'So far, retail like-for-like sales in the second half are ahead - a big pick up from the first half. Directory continues to perform well - sales are up more than 12 per cent - thanks to good customer number growth. Despite some uplift as a result of favourable weather, this is an encouraging performance.'

Next said that timing of the summer Sale this year was perhaps too late, in view of the prevailing retail conditions. The company is to review its level of markdowns going forward, which may not have been 'aggressive enough' over the period.

Next's value sub-brand, Lime, launched at the beginning of the year, has performed better than expected and several standalone stores will open in the second half to gauge whether Lime could operate as an independent brand.