Growth in online sales led to a 7.8% rise in Next's Directory sales in the first half of its financial year, compared to the same time last year.
In a trading statement today the multichannel fashion retailer said the Directory, which sells online, by mail order and telephone, had put in a "much better than expected performance". Predictions in May suggested growth would be in the range of 2.5% to 5% in May.
As a result, total retail sales grew by 1.3% in the first half of the year, to July 31, compared with the same time last year. Like-for-like sales, including direct sales, grew by 1.7%, but when direct sales were excluded, sales fell by 1.5%. The VAT increase of the beginning of the year had been absorbed without the need to raise prices.
Cost controls had been good and overheads declined as a percentage of sales, leading to expectations of a 15% rise in group operating profits for the first half of the year.
For the second half of the year he fashion retailer expects its Directory sales to grow by between 4% and 8% in the second half of its financial year, compared to last time.
That is expected to give a lift to overall sales. Like-for-like retail sales excluding direct sales are predicted to be in the range of -4.5% to -1.5% as a "cautious" consumer mood leads to more restrained spending in the second half of the year, which started on August 1. But once Directory results are factored in, Next sales for the second half are expected to show growth between 0% and 3%.
If sales budgets are achieved, pre-tax profits are expected to be in the range of £535m to £560m, a rise of between 6% and 11% compared to last year.
But for 2011, the company warned that retail prices were likely to rise by between 5% and 8%, as a result of higher cotton prices and other costs, as well as exchange rates.