Embattled retailer Next said today it was more positive about its prospects than it was at the start of the year, despite reporting another six months of dwindling sales.
Group sales came to £1.91bn, down 2.2 per cent from £1.96bn last year.
Although sales in retail dropped 8.3 per cent to below the £1bn mark at £993.2m, directory sales jumped 5.7 per cent in the same period, reaching £868.4m.
Pre-tax profit fell 9.5 per cent to £309.4m.
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Why it’s interesting
Next is seen as a key indicator for UK retail as a whole. Its steady decline has cast a shadow over the high street in recent years, but the more optimistic tone in this latest update could be a much-needed boost for retailers.
In fact, chief executive Lord Wolfson’s review served as a rallying call for the high street, as he defended the company’s substantial estate with a justification for retail stores in a digital shopping environment.
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“There are those that believe that retail shops will be more of a liability than an asset in the future; we do not see it that way,” he said in his review.
“There are two important reasons. Firstly, our store portfolio looks set to remain profitable and strongly cash generative for many years to come. Secondly, our shops are an important part of our online service to the increasing number of customers who collect and return their orders through our stores.”
His comments directly contradicted the reasons given for a downgrade on the company by Berenberg analysts last month, who called Next’s store portfolio “unwieldy”.
What Next said
“While the external environment looks set to remain difficult, from where we stand today our prospects going forward appear somewhat less challenging than they did six months ago,” said Lord Wolfson. “We have seen the benefits of product improvements begin to work their way through into our Autumn ranges and the medium-term outlook for pricing looks more benign, with price inflation set to moderate to just two per cent in the first half of next year and to 0 per cent in the second half.”
Read more: Next slashes Lord Wolfson’s pay due to a “challenging” year