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Next highlights positive signs amid disappointing results

Next paint colour display

High street giant Next, highlighted positive trends for the coming six months, as they announced a poor set of results for their first six months trading.

Its financial performance for the six months to 31st July was disappointing, with total sales falling to £1.9bn, 2.2% below last year, whilst pre-tax profits fell 95% to £309.4m.

Revenue generated by Next’s large estate of over 500 stores fell 8.3% to £993.2m. However, Next Directory did much better, delivering a 5.7% increase in sales, down to new technology that personalises the products and ranges it can show to customers using the website.

A spokesman said: “The first half of the year has been difficult and sales and profits are in line with our cautious expectations. However, our performance in the last three months has been encouraging on a number of fronts and whilst the retail environment remains tough, our prospects going forward appear somewhat less challenging than they did six months ago. As a result, we are taking the opportunity to modestly upgrade our sales and profit guidance for the full year.”

Simon Wolfson, the chief executive of the fashion chain, said on Thursday that price rises would be about 4% this year, before easing next year.

“Next year price inflation looks set to work its way out of the system as the effects of the one-off Brexit devaluation of the pound begin to annualise,” he said. “Assuming no further movement in the value of sterling, in the first half of 2018 we expect price rises of no more than 2% and no price rises at all in the second half of 2018.”

Martin Lane, Managing Editor of money.co.uk provided a comment for Insight DIY “With fierce competition and consumers tightening their purse strings it’s easy to see why Next PLC is struggling. Next have really worked on their online strategy, and seen massive improvements in this area, but the majority of their growth was by selling other brands. It seems like they could be trying to become the next Debenhams or John Lewis".

“For the brand to stand the test of time they need to rethink their strategy. Their profits are falling and they have their work cut out to make sure they don’t become the next victim of the high street.”

Source: Insight DIY Team

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14 September 2017

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