Online sales strength keeps Next healthy

NEXT beat the gloom on the high street thanks to a strong performance from its home shopping business.

But the group’s chief executive Simon Wolfson said that without its large online business and 300,000 sq ft of new shopping space, Next would be in a similar position to Marks & Spencer, which recently revealed its worst trading performance for three years.

Next, second only to M&S in clothing, expects to report a 2012-13 pre-tax profit of £575m to £620m, up from expectations of £560m to £610m.

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Next has defied the gloom thanks to its strong online offer, a constant stream of new store openings and diversification into homeware and overseas.

The group said total sales rose 4.5 per cent in the 26 weeks to July 28 as store sales rose by 0.2 per cent and online Next Directory sales rose 13.3 per cent.

The group said the store performance was helped by new space offsetting lower sales from shops open more than a year.

Investec analyst Bethany Hocking said: “This statement is further evidence that Next is outperforming peers and gaining market share.”

Last month M&S reported a 6.8 per cent fall in first-quarter like-for-like general merchandise sales, blaming record rainfall in April and June for its worst sales performance for three and a half years.

Analysts believe that the wet summer weather encouraged shoppers to go online, boosting Next Directory.

However, Lord Wolfson noted that Directory’s best two weeks of the period came during two weeks of fine weather in May.

“I think generally Directory is just more robust than retail because online is growing across the market rather than any weather specific factor,” he said.

He said he is happy with the firm’s autumn/winter ranges and forecasts no price increases in like-for-like product in the second half.

Lord Wolfson said he is not worried about the UK economy.

“I don’t think the economy’s going to take a turn for the worse, but I think it’s going to be treading water for some time,” he said. “If you look across Europe you’d say that actually Britain’s in a pretty good place.”