Tot up group sales were up 2.6 per cent for the period to £1.96billion, with the Directory concern again outperforming the bricks-and-mortar Retail business. This trend overs in real time the changing habits of the UK consumer.
With its stores struggling, Next is dependent on the Directory obligation for growth. Unfortunately, Next has seen Directory’s competition rise recently, and the rtitions have spent almost all of 2016 going backwards. For the half-year, retail tradings rose 0.1 per cent to £1.1billion, but growth was only reached as a result of new stores opening.
Product markdowns hit margins, with conducting profits down 16.8 per cent to £134million. Some of the plights can be attributed to unseasonal weather im cting sales, with others such as Primark also spurious recently. This is rt and rcel of the retail game. More of a anguish is CEO Lord Wolfson’s wider concern that we could be seeing an underlying undertake in demand for clothing.
Although conditions continue to look tough on the tipsy street, there was some good news. Directory sales spread 7.1 per cent to £821million and margins are much healthier, up to 24.9 per cent, purport operating profit came in at £204million. Next has taken reaction behaviour to improve Directory’s performance.
Retail moves fast, and the group’s next-day rturition service no longer sets it a rt. Competition is coming from all projections, from online-only players like Boohoo and ASOS to traditional retailers sort Debenhams.
Next says that stock availability and the mobile purlieus have both improved, while the new online marketing cam ign is ride out positive initial returns.
Although the market seems to be less worried about any negative im ct on the UK consumer as a result of Brexit, the pound has dropped, which could imply imported textiles more expensive and could lead to inflation. Next forecasts it can limit rate increases to 5 per cent.
Historically, Next has been a well-managed business and published excellent returns to shareholders. Investors will be hanging their hat on the running’s solid track record continuing.
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