Next nears £1bn profit as it continues to defy retail gloom with bumper sales

Next looks set to post £1bn annual profits for the first time as it continues to defy retail gloom with bumper sales.

In a cheery market update, the High Street stalwart revealed its profits are expected to hit £995m for the year to the end of January.

It is the second time in two months that the FTSE 100 company has raised its full-year forecast, having increased the figure by £20m to £980m in August.

This also puts Next on the cusp of hitting £1bn annual profits, a milestone very few British retailers have achieved.

Tesco, Marks & Spencer and B&Q owner Kingfisher are the only other listed UK retailers to have made £1bn in profits in a single year.

The improvement came after Next said sales in the six months to the end of July were 8 per cent higher than a year earlier, at £2.9 billion. Profits also rose 7 per cent to £452 million.

UK sales rose just 1 per cent in the first half, weighed down by weak demand for seasonal collections amid cooler early summer weather.

But overseas sales rose 23 percent and the company said UK transactions were “substantially better” than expected as the weather improved during August.

Next shares rose 0.5 percent, or 55 pence, to 10,390, taking their rise since the start of the year to around 30 percent.

The update cements Next as one of Britain’s most trusted retailers, while chief executive Simon Wolfson has been praised for his leadership.

Rivals H&M and Primark have recently said wet weather has dampened their Christmas clothing sales and put pressure on their businesses as they struggle to move online.

Announcing yesterday’s figures, Wolfson said Next was “at the start of a new phase” with more than half of sales and profits online and rapid growth in non-Next brands.

It recently bought stakes in brands including Joules, Reiss and FatFace, and has been driving international growth.

The group has signed an agreement in India with operator Myntra to develop physical and online stores.

It will also expand a deal with US department store chain Nordstrom, where it currently sells children’s clothing.

Clive Black, director of consumer research at Shore Capital, said Next had “set expectations over a sustained period” despite challenges in the consumer goods sector.

And Richard Hunter, director of markets at Interactive Investor, said the results “underline the group’s unrivalled understanding of the market”.