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Next reports rising sales and profits, especially online, while Argos sales are down

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Next today reported rising profits and sales as online growth continued strongly.

The fashion retailer, a Model trader in the IRUK500 research, said Next brand sales reached £1.85bn in the half-year to July 2015, a rise of 3.3% compared to the same time last year. Within that, however, store sales grew by 0.2% to £1.1bn, while directory sales, which take place primarily online, grew by 8.2% to £767m.

Pre-tax profits grew by 7.1% to £347.1bn, with retail profits up by 5.7% to £161bn and directory profits up by 7% to £184.1m.

The company said that the Next Directory business had changed slowly in recent years, with new sales coming both from third-party branded sales and from the overseas online business. In the UK, it said, directory sales had grown by 6.3% and overseas they were up by 24.1%. Now the focus is on developing the speed of delivery overseas, with new hubs opened in Ireland and Russia, and planned for China and Germany.

Meanwhile, the Home Retail Group, reported falling sales at Argos , where sales of £897m in the second quarter were 0.4% down in total, and 2.8% down on a like-for-like basis, compared to the same time last year, while first-half sales of £1.7bn were 3.4% down on the same basis.

Internet sales represented 46% of total Argos sales and, within that, mobile commerce sales grew by 11% to represent 25% of total Argos sales.

Sister company Homebase reported first-quarter sales of £378m that were up by 3.9% on last time, and first-half sales of £816m that were 5.6% up.

John Walden, chief executive of Home Retail Group, said: “Argos delivered an improved sales performance in the second quarter. It made good progress with new stores, opening more than 50 digital concessions within Homebase and Sainsbury’s, which have generated encouraging early results. Consistent with our previous guidance, Argos’ sales continued to be adversely impacted by the performance of a number of key electrical product categories as well as weaker overall market conditions in August.

“Homebase performed well across its peak trading season, delivering good like-for-like sales growth in both quarters of the first half, while continuing its progress on both its store closure programme and the Productivity Plan more broadly.

“The outcome for the Group’s full-year generally depends upon the important Christmas trading period at Argos which, this year, seems less predictable than usual due to a less certain promotional environment. Our teams have made solid progress preparing for this period, including substantially completing the technology and operational steps necessary to introduce new store collection and home delivery propositions to our customers. We will be making increased marketing and promotional investments to launch these propositions and we expect customers to increasingly embrace them over time.”

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