Next in line for growth in sales and profits

Next has been encouraged by trading in the 13 weeks to May 1, with high street sales up 2.8 per cent, and its Directory arm trading comfortably ahead of earlier predictions at 7.2 per cent higher. Like-for-like sales including online business rose by 2.2 per cent.

The company said it remained "very cautious" about the trading outlook.

However, with forecasts of a spending slowdown already taken into account, it still expected another year of sales and profits growth.

It said profits for the year to January were on course to be near the top end of current City forecasts of between 525m and 565m.

The fashion and homewares chain warned that trading over the rest of the financial year would be affected by tougher comparatives and action to tackle the country's budget deficit.

"Whatever form this action takes, it is likely that it will act to restrain growth in consumer spending," Next said in a trading statement.

Next enjoyed a strong performance in 2009 after it refocused the business to support new products and trends.

It made a series of profit upgrades throughout last year as sales continued to "surprise on the upside".

This was due to improving consumer confidence and efforts to offset pricing pressures caused by the weak pound.

"The business is still performing to the top end of expectations and Directory in particular has got off to a great start this year," said Singer analyst Matthew McEachran.

"The shares should respond positively."

Seymour Pierce retail analyst Freddie George, who has a buy rating on the stock, said there was still potential for earnings upgrades despite the company's cautious comments on the outlook.

He added: "The company has a relatively strong balance sheet, has significant potential to grow internet sales overseas and has the directory business in the UK, which we believe has significant value."

Shares in Next, which trails clothing market leader Marks & Spencer, have risen 40 per cent over the last year, outperforming a 13 per cent rise in the FTSE General Retailers index.

Britain's biggest mall owner, Liberty International, yesterday revealed that the UK retail market had stabilised and prospects for its Capital Shopping Centres' (CSC) assets were encouraging.

Liberty, which is due to demerge into two companies, said in an interim management statement for the period January 1 to May 5 that occupancy at CSC has been maintained at 98 per cent.

"With the pipeline of new shopping centres sharply curtailed by recent economic conditions, prospects for the performance of CSC's existing assets are encouraging," chairman Patrick Burgess said in the statement.

Mr Burgess said there had been a much lower level of retailer failures than in the first quarter of 2009, and the central London market had continued to perform strongly.

Of Liberty's Capital & Counties (C&C) operations, Mr Burgess said central London had continued to perform well with Covent Garden recording continuing increases in footfall.

Speaking of the sector as a whole, he said: "We are pleased that the UK retail market has stabilised."

Next past, present and future

Next can trace its roots all the way back to Victorian Yorkshire.

In 1864, J Hepworth & Son, Gentleman's Tailors, was established in Leeds.

Its growth began in earnest in 1981 when Hepworth bought the chain of Kendalls rainwear shops, in order to develop a womenswear group of shops called Next.

The first Next womenswear store was opened in February 1982.

There were 70 shops by the end of July.

In 1984, Next for Men, was launched. In the same year, the first mini department store in Edinburgh opened, incorporating womenswear, menswear, shoes and a caf.

The company celebrated its silver jubilee in 2007.

The following year it acquired the younger women's fashion brand, Lipsy.

Earlier this year, Next was confirmed as the official clothing and homeware supplier to the London 2012 Olympic Games.