Next posts rise in profits but warns of weaker sales

Retailer Next has cautioned that its sales in August and early September have been "disappointing", sending its shares down 7%.

It gave the warning as it reported a pre-tax profit of £251m for the six months to 31 July, up 10% on last year.

Next said a big rise in online sales offset a decline in like-for-like sales at its stores.

Despite weak current sales, it said it was sticking to its full-year profit target.

Next said: "August and early September sales have been disappointing during what has been an unusually quiet period.

"We remain cautious about the economic outlook while maintaining full-year guidance that our sales, profits and earnings per share will all move forward on last year."

It added: "If the economy had a weather forecast the outlook would be overcast - patchy rain for the foreseeable future."

'Solid numbers'

Next's half-year revenues rose by 5% to £1.6bn.

Total sales at its stores increased by 0.2%, compared with a 13% rise at its Next Directory online and mail order business.

The company did not release any exact like-for-like sales figures, only to say that they had fallen at its stores by that measurement.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said Next's share price fall was "a sign of the times" because "the market makes no allowances for disappointment".

He added: "Yet the share price reaction masks another set of solid numbers, with extremely strong gains among the key metrics of revenue, profits and earnings per share."

Fellow analyst James McGregor, of consultancy Retail Remedy, said the Olympics and Paralympics had probably caused Next's weak sales in August and September so far, as people put off going shopping.

He added: "Weaker sales in these two months may take the shine off the current period, but the company already has a strong autumn/winter stock package in place that should help it continue growth."