Next raises profit outlook as online sales grow

High Street bellwether Next on Tuesday defied the gloom engulfing some of its rivals as it raised profit hopes this year thanks to the heatwave this summer.

Chief executive Lord Wolfson fretted in August that the hot weather could deter shoppers from buying clothes and drag down sales, but his gloomy stance failed to materialise.

As a result, the retailer, which has more than 500 stores in the UK, upped its profit forecast for the year by £10 million to £727 million. Shares were up 8%, or 392p, to 5516p.

Sales rose 3.9% to £1.9 billion in the six months to July. However, store sales, which accounted for two-thirds of Next’s business 10 years ago, dropped by 6.9%, to £925 million. Today, traditional high street sales account for less than half of total revenues. “For the first time in two years the gains online are just outweighing the losses in retail,” said Lord Wolfson.

He added he was in talks with landlords to renew many of the leases expiring over the next few years.

“The terms we’re getting on renewal are attractive enough to keep stores open,” he said, although others are earmarked for closure. Next has closed 22 this year.

In contrast, online sales jumped 17% to £892.3 million from £764.3 million the year before, boosted by selling brands such as Whistles, Hobbs or Jigsaw.

Next has no plans to bring more brands in-store. “The success we’ve had has been by introducing third-party, non-competing concessions like coffee shops, travel operators and stationery rather than through adding other people’s brands,” Wolfson added.