Surging internet and catalogue sales propel Next to all-time high

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The Independent Online

Shares of Next hit an all-time high yesterday after the clothing retailer revealed better-than-expected interim results to the City.

A surge in catalogue and internet business helped offset a poor performance by the group's high street stores. It drove pre-tax profits 3.6 per cent higher to £178.9m in the six months to the end of July on sales of £1.51bn, up 8 per cent.

Next shares featured as the top performer in the FTSE 100, rising 7.6 per cent, or 129p to 1,834p, on the back of the figures.

Sales at the company's home shopping business, Next Directory, registered a 15.3 per cent increase on last year to £359m.

The group revealed that the internet accounted for 45 per cent of orders at the division. Looking ahead, Next said it plans to boost its internet and catalogue offering where recently new product lines have included jewellery and electricals.

However, it was a different story at the group's high street stores. First-half like-for-like sale across Next Retail slumped 7.5 per cent. Simon Wolfson, the chief executive, blamed the fragile state of the UK consumer, growing competition from rivals such as Marks & Spencer and New Look as well as the supermarket chains Tesco and Asda, and some weakness in its range of products.

Mr Wolfson expects Next Retail's performance to improve in the second half although like-for-like sales are likely to remain in negative territory.

The Next boss indicated yesterday that he expects an improved performance in 2007, with like-for-like sales probably ending the year flat. Mr Wolfson said: "Negative like-for-like sales at the retail business will not continue for ever. I am less pessimistic about next year's outlook."

In May, Next launched a new shop format concept at its Oxford Circus branch in London. This store and two others where it was implemented enjoyed an 8 per cent sales benefit. By the end of the year, about 15 per cent of Next's estate will be in the new format.

During the first half, the group bought back 6.9 per cent of its shares, spending £283.5m. Over the remainder of the year, it has promised to buy back a further 2.8 per cent. Next raised its interim dividend by 10.7 per cent to 15.5p.

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