The fashion retailer Next is to push ahead with expanding its online presence overseas after its internet and catalogue business delivered sales of more than £1bn for the first time.
Its 25-year old Next Directory was a key driver behind the high street chain posting a rise in annual profits last year. But Lord Wolfson, the chief executive, struck a cautious tone on consumer spending, saying this year "looks no less challenging".
Next, which has 536 stores, saw its pre-tax profits rise 5 per cent to £570.3m in the year to 28 January, on total turnover up 2 per cent to £3.51bn. Its performance reaffirms the fact that many large retailers are continuing to grow, despite the consumer downturn.
But it was the figures for Next Directory that caught the eye. Its online business delivered operating profit of £262.6m, on sales up by 16 per cent to £1.09bn.
Neil Saunders, the managing director at the retail consultancy Conlumino, said: "In many ways, Next's figures are a microcosm of wider trends in the retail sector: sales through physical stores are under significant pressure, while online is continuing to show good growth."
Next Directory alone made more money last year than both John Lewis Partnership's eponymous department store chain and its Waitrose supermarkets, which had operating profits of £158m and £261m, respectively.
Lord Wolfson said: "I think we have done better in Directory than we anticipated, particularly our overseas business." Next, which delivers to 49 countries, had overseas online sales of £33m last year. It is targeting £50m in 2012-13, as it expands rapidly to 15 more countries. It will launch a Chinese language site this year and start online sales in the Middle East.
On consumer spending generally, Lord Wolfson said he did not expect "things to get any worse", highlighting positive signs such as the lower inflation and a gradual rise in wages.
Next raised its dividend by 15 per cent to 90p, which will net Lord Wolfson a payout of £1.47m.
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