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Next points to rising profits despite slow sales in ‘tougher’ online environment

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Next today suggested that its strategy of resisting pre-Christmas discounts both online and offline would pay off in improved profitability, even though sales growth was subdued in the run up to Christmas. Online competition, it said, was “tougher” as more retailers improved their levels of service.

The multichannel fashion retailer, a Model retailer in the IRUK Top500 and led by Simon Wolfson [pictured], predicted in a trading statement that its full-year pre-tax profits would rise by 4.4% to £817m as a result of its decision not to cut prices ahead of its end of season sale. But it said that full-price sales in the 60 days from October 26 to December 24 were up by 0.4%, with full-price sales through its predominantly online Directory up by 2% and sales in store down by 0.5%.

In the year to date – to January 2 – it said full-price sales rose by 3.7%, which includes 6.1% growth in directory sales and 2.1% in store.

At this time last year, Next reported 2.9% growth in full-price sales in the period between October 28 2014 and December 24 2014, with retail sales up by 0.5% and directory sales up by 7.5%.

The main reason for slow sales in the fourth quarter of the year, it said, was the unseasonably warm weather in November and December – following a September and October that were colder than last year. But directory sales were also hit by a shortage of available stock from October onwards. “In addition,” it said, “the online competitive environment is getting tougher as industry-wide service propositions catch up with the Next Directory.”

Next will publish its full-year results on March 24.

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