Sales up 5% in first half, with home stores exceeding expectations but chief exec anticipates little growth in shopper spending.
Next chief executive Lord Wolfson stated that the retail chain had "delivered a robust set of results" for the first half, despite what he described as "testing" trading conditions. Next posted a 5% increase in group sales, with pre-tax profit up 15% to £213m for the six months to July 2010.
The retail chain's standalone home stores have also outperformed expectations, with sales 31% ahead of the group's plan. Next opened five new Home stores this year and plans to open a further seven in the second half, taking the total of standalone outlets to 31.
The retailer's trading statement explained: " The emphasis of our space expansion programme has moved away from opening mainline stores in new locations. Instead we have focused on extending or moving within existing trading locations and opening new Home standalone stores. We expect this trend to continue for at east two years."
However, while Next says it doesn't anticipate a double-dip recession, it believes consumer spending will be slow to pick up - subdued by the VAT increase, higher rates of savings and the Government's bid to cut the deficit.
"Next does not expect a double-dip recession, nor do we anticipate a meltdown in consumer spending, not least because overall employment levels are holding steady. However, we are expecting very little by way of growth in total consumer spending for the foreseeable future."
The retailer also explained that it will have to adapt to a new type of consumer environment, where "top line growth will need to come form other opportunities" and believes it is sensible to view this new environment as normal.
Next plans to do this through acquisition of new retail space, especially for home products and the continued growth of Next Directory, which reported a 9.5% sales jump for the first half. Online orders now account for more than 70% of Directory sales.
Lord Wilson added: "Looking forward we believe the consumer environment may remain sluggish for some time. However, Next has proven avenues for expansion that we can exploit to increase total sales."