Retail chain Next said it rode out the “perfect economic storm” today after £1bn of online and catalogue sales boosted profits by five per cent.
The fashion and homewares chain, which has 536 stores, said profits of £570.3m for the year to January 31 were slightly ahead of its previous guidance.
Its Directory arm saw sales rise 16 per cent to £1.1bn, and now accounts for nearly a third of its business, offsetting a 1.4 per cent decline in its retail division.
Chief executive Simon Wolfson said he hoped softer inflation will mean consumers no longer feel they are becoming poorer, which should give a boost to the UK’s retail sector.
However the group predicted more retail sales declines this year and warned that the outlook for the year ahead remained “very uncertain”.
It will open 15 more stores than it closes in the coming year, as well as 19 new concept sites in coming years, which have separate fashion and home stores next to one another and sell a range of DIY goods.
Next said: “2011 presented the retail sector with the perfect economic storm. Consumer demand was anaemic, held back by a combination of high inflation, low growth in wages and limited growth in consumer credit.”
Lord Wolfson believes Next’s high street business still has a bright future as it goes hand-in-hand with the flourishing Directories business. Stores were increasingly being used to handle online orders, with 59 per cent of parcels returned through stores.
He said: “We remain convinced that there is a continued place for fashion retail stores and that increasingly customers will see stores and online as part of a single service.”