High street giant Next unveiled a 10 per cent jump in profits in the first half of the year today but warned that August and September had been “unusually quiet”.
The fashion and homewares chain, which has around 540 stores, said it was still on course to meet full-year profits of between £575 million and £620 million.
The group reported pre-tax profits of £251 million in the six months to July as new stores and strong online sales offset lower sales from shops open more than a year.
A decline in like-for-like sales hit profits by £18 million, Next said, while new space added £14 million and growth in online sales added a further £26 million.
Next published its half-year results at the same time as department store chain John Lewis - which saw like-for-like sales growth of 9.2 per cent in the six months to July 28 and nearly tripled operating profits at £45.6 million.
Next chief executive Lord Simon Wolfson said the retail sector and wider economy was subdued and would not see a return to boom for “some time to come”.
Shares in Next dropped 6 per cent after the company's warning on recent trading.
Matthew McEachran, retail analyst at Singer Capital, said: “Management indicates that trading so far in August and September has been disappointing during what has been an unusually quiet period, some of which we put down to the Olympics.”
Lord Wolfson said the overall impact of the Olympics was negative - although this had been expected - as potential consumers stayed at home to watch the event rather than shop.
The womenswear market was the most subdued in the period, he said, while homewares performed well, including August and September sales.
The chief executive warned the biggest barrier to growth was the lengthy planning permission process, which has prevented the company from opening new space earlier.
Opening new space is part of Next's strategy, alongside growing its website Next Directory, but progress has been slower than expected in the current year.
The group expects to add about 250,000 sq ft of trading space, net of closures, in the current year.
Retail sales were slightly ahead of plan in the half year, Next said, with sales excluding VAT up 0.2 per cent on last year and new space adding 3.7 per cent.
The Next Directory website saw a 13.3 per cent increase - 8 per cent in the UK - with its new “Offers Tab”, the online equivalent of a clearance store selling the previous season's stock, adding 2.4 per cent to UK sales.
The website's active customers increased year-on-year by 11.7 per cent to 3.3 million.
The company's international franchise partners, which operate 160 Next stores in 31 countries, helped push international revenues up by 13 per cent to £37.9 million.