Next hikes profit outlook as sales surge overseas and UK trading rebounds

The group, which is led by chief executive Lord Wolfson, reported a 7.1% jump in underlying pre-tax profits to £452m for the six months to July 27 as total group sales lifted 8%

High street heavyweight Next has boosted its profit forecast for the year once again, this time on the back of booming sales abroad and a recent uplift in UK trading.

The retail giant, steered by chief executive Lord Wolfson, has seen a 7.1% climb in underlying pre-tax profits to £452m for the half-year ending July 27, with overall group sales rising by 8%. Despite a modest 1% increase in UK sales, weighed down by a dip in Next brand ranges which plummeted by up to 7.4% in June due to lacklustre demand for seasonal items during the cooler start to summer, international sales have soared by 23% in the first half.

Moreover, Next has experienced a "materially" better-than-anticipated performance in the UK since the half-year mark, attributing the uptick to improved weather conditions in August. The company has reported a 6.9% surge in full-price sales in the initial six weeks of the second half and now anticipates a 4% rise in sales across the year, with a 5% growth in UK retail expected in the third quarter.

Next has raised its full-year profit outlook by £15m to £995m, indicating an 8.4% increase from the previous year. Next has announced further price reductions for its autumn and winter collections, with prices dropping by 0.3% following a 1% decrease in the first half.

The group is poised to enter a new era, propelled by its flourishing international sales and its successful integration of online and physical store operations. The retail giant reported a dip in like-for-like full-price sales by 2.2% across its stores during the first half, while their online sales soared by 8.4%.

This performance comes amid rising costs due to significant increases in the national living wage, which has bumped up the firm's staff salaries by an additional £57m for the year. "We enter this new era in a more positive frame of mind with new avenues of growth and a more stable business," the company expressed optimistically. "Retail sales have stabilised and, though the shift to online may not have run its course, its effects are much diminished, not least because retail is a much smaller part of our business."

Next anticipates its store count will hold steady at 455 by next January, a slight decrease from 458 at the beginning of this year, as it plans to close eight stores and open five. The retailer also noted that UK consumers are experiencing a boost from higher wages, which are outpacing inflation, thereby bolstering spending confidence.