Store share jumps 6pc with £228m pre-tax profit
Shares in British high street retailer Next -- the second largest UK clothing seller -- jumped more than 6pc yesterday after it reported an 8.5pc rise in pre-tax profit to £228m (€262m) for the first half of its financial year ending in July.
Investors cheered the results in what is a depressed consumer environment, as Next chief executive Simon Wolfson said "early indications" were that retail headwinds were likely to ease as the group moves into 2012. Revenue at the group in the first half was 3.6pc higher at £1.56bn (€1.79bn).
"We have strong evidence that there will be little or no inflation in our own prices and it seems probable that other inflationary pressures will ease as commodity price rises begin to annualise in the first quarter of 2012," he said.
Next added that the bubble in cotton prices had burst, with prices now 50pc below their peak in March. Clothing retailers, including Primark, have been hit by higher input costs and pressures on factories in China and elsewhere in the Far East that had been working at full capacity.
Next said the unmitigated impact of those effects, including a VAT increase in the UK, would have been to increase its prices by 18pc.
However, its average selling prices rose 7pc in the first half as it developed alternative sources and placed larger individual orders earlier in the season.
It said placing orders earlier had limited its ability to react to demand in-season.
Next expects average prices across its range to rise 8pc in the second half of its financial year.