Next, the UK's second-largest clothing retailer, reported a jump in first-half earnings and said next year may not be as challenging for retailers.
Pretax profit climbed to £228 million in the six months ending July 30th from £210 million a year earlier, the London-based retailer said today in a statement. The interim dividend was increased by 10 per cent to 27.5 pence per share.
"Any recovery in spending is likely to be slow and take a long time, but it seems reasonable to believe that by the second quarter of next year we will begin to see some recovery in the consumer environment," chief executive Simon Wolfson said in the statement.
Next has benefited from its position as the UK's biggest online clothing retailer as more consumers seek the convenience of home shopping.
The owner of the Next Directory catalog is also adding home-only stores and improving delivery time in international markets including Germany, Poland, North America and Australia to reduce exposure to the UK.
"We expect Next to continue to outperform the UK market in sales growth and profits," said MF Global analyst Andy Smith. "Directory is expected to grow at close to double digits in the second half and raw-material costs are expected to fall in first quarter of 2012."
Next fell 4 pence, or 0.2 per cent, to 2,335 pence in London trading yesterday. The stock has gained 18 per cent this year as larger rival Marks and Spencer Group has fallen 14 per cent.
The retailer said prices increased by 7 per cent this year driven by higher costs and the value-added tax increase.
The retailer reiterated forecasts for little or no inflation in prices next year as commodity price rises annualise.
Meanwhile British retailer John Lewis reported an 18 per cent drop in its first-half profit, hit by discounting at its department stores and a step up in investment, and forecast tough trading conditions would persist into 2012.
The employee-owned group, which runs upmarket grocer Waitrose as well as Britain's biggest department store chain, said it made a profit before tax of £91.2 million in the six months ended July 30th.
"Trading conditions are set to remain challenging through the rest of this year and into 2012," said chairman Charlie
Mayfield.
Bloomberg
