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Online now accounts for almost a third of sales at fashion retailer Next – and 44% of profits

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Online transactions at Next now account for almost a third of its sales – and more than 40% of its profits, the company said today. But, it said, its stores had an important part to play in the success of ecommerce. Thus continuing to invest in them remained important.

The fashion retailer, reporting its full-year results, said 32% of group sales and 44% of operating profits now came from its online businesses both at home and overseas. It said: “We believe that part of this success is due to our Next Retail store network and the ability of the two businesses to work together and support each other. Accordingly, during the year we continued to invest in our stores, upgrading and expanding where opportunities presented themselves.”

In the year to January 2012, Next reported a 4.3% rise in revenues from its continuing businesses, to £3.4bn from £3.3bn in the previous year. Pre-tax profits from continuing businesses rose by 5% to £570.3m from £543.4m last time. Online sales rose by 16.4% to £1.1bn and profits rose by 18.3%. Within that, full price sales accounted for more than half of the 16.4% growth in sales. However, store sales fell by 1.4% to £2.19bn. International sales also saw a boost, rising by 13.4% to £76.3m. The company said it planned a Chinese language site to go live in mainland China during 2012, “although,” it said, “this has proven harder to get up and running than initially anticipated.”

Chief executive Simon Wolfson said: “There is a lot of speculation about the future of retail stores given the rapid growth of online trade generally. We remain convinced there is a continued place for fashion retail stores and that increasingly customers will see stores and online as part of a single service. We continue to see more and more directory customers using our shops to receive and return our products.”

He illustrated the point with figures showing that 20% of Directory orders were collected in Next stores in January 2012, compared to 13% in July 2011. Meanwhile, 59% of parcel returns took place through stores in January 2012 compared to 50% in July 2011.

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