Next sales up 3.2% in first half

3rd Aug 2011 07:40

High street retailer Next saw total sales rise 3.2% in the first half of the year, as strong growth in Directory offset a moderate decline in Retail.The firm, which had previously expected an overall sales growth of between +1.5% and +4% in May, said that the sales figure is "comfortably within the guidance range". Next Directory saw sales climb 15.1% on the same period last year, while Retail sales fell 1.7%, but the firm assured that new space performing in line with targets.As such, internal profit guidance for the full year remains unchanged, before adjusting for last month's sale of its customer services operation Venture to The Capita Group for £65m. The use of the sale's proceeds are to go towards a share repurchase programme totalling £225m in the current year, £213m of which have already been purchased or have been committed to purchase."The use of the £65m Ventura sale proceeds to buy back NEXT shares means that the sale will be broadly neutral to earning per share," the statement said.After factoring in the share buy-backs, EPS is expected to rise from 221.9p last year to 230p-250p in 2011, implying growth of between 3.7% and 12.7%.In May, Next said it expected to report between £535m and £585m in pre-tax profit in 2011, but after including the exceptional gain of £36m on the Ventura sale (and a profit adjustment for the sale), this figure will rise to between £566m and £616m.Without the Ventura business, the profit guidance is in the range of £526m to £577m, implying annual growth of between -3% and +6.2%.Meanwhile, the cost price inflation experienced in the first half is expected to continue into the second half at broadly the same rate of +8%. "2012 looks like it will be a more benign year for cost price inflation.  The combination of a sharp reduction in cotton prices, an easing of manufacturing capacity constraints in the Far East and the annualising of this year's VAT increase all mean that selling prices are unlikely to rise further for Spring 2012."BC