Next sees new gardening centres as path to greater growth

Fashion retailer Next is branching out into garden centres after a trial format came up smelling of roses.

The high-street favourite has planning applications for five new home and garden centres in the pipeline after its first, at Shoreham, West Sussex, proved a hit with customers.

Next, whose chief executive is Tory peer Lord Wolfson of Aspley Guise, has identified a total of 19 locations suitable for the new format. Each large shop sells fashion, homeware and DIY goods, as well as featuring a small garden centre. A second Next Home and Garden opened in Ipswich this summer and another is planned for Warrington.

Lord Wolfson is expanding on the back of Next's recent strong trading. It delivered a 4.5 per cent leap in sales over the six months to the end of July, which was ahead of City expectations and helped it to eclipse Marks & Spencer, its closest competitor.

Next Directory, its catalogue and online business, was the star performer with revenues up 13.3 per cent. The performance saw the retailer raise its profit guidance to between £575m and £620m for this financial year.

Gardening has become a hot area for investors and retailers keen to attract more of the grey pound. City financier Guy Hands became the latest to get green fingers this spring when his Terra Firma investment vehicle paid £276m for the Garden Centre Group which operates 129 stores under the Wyevale, Country Homes and Gardens, and Blooms brands. Tesco acquired Dobbies Garden Centres, a rival chain, in 2008.

Next's home and garden centre store in West Sussex has become one of the FTSE 100 retail group's best performing shops. Since opening a year ago, it has delivered higher sales on a Sunday than any of Next's other 500-plus stores in the UK and Ireland.

While the Shoreham store benefits from good transport links and high footfall from nearby shops at the weekend, the success of the format has convinced Next to roll it out further.

At £5.8bn, Next's stock market value has now grown to exceed that of rival M&S.