The bigger, the better says Next

Next, the high street fashion chain, plans to continue its aggressive expansion into larger stores this year despite admitting that new space depresses its underlying sales.

Next, the high street fashion chain, plans to continue its aggressive expansion into larger stores this year despite admitting that new space depresses its underlying sales.

The group, which beat market forecasts with a 17 per cent rise in pre-tax profits last year, expects to add another 420,000 square feet to its estate - or about 12 stores. It is targeting bigger and bigger shops, culminating in a three-floor, 80,000 square foot anchor store at Manchester's Arndale Centre at the end of 2005.

Simon Wolfson, the chief executive, said: "The more successful we are at getting new space, the lower our like-for-like sales will be." Next's new stores, often opened in addition to smaller high street sites on out-of-town retail parks, hit its same-stores sales numbers but boost the group's bottom line.

Mr Wolfson added: "We're not going to stop taking on stores because cosmetically it affects our numbers."

Striking a cautious note, despite the company's strong start to its financial year, he said Next expected underlying sales growth to moderate. Like-for-like sales rose 3 per cent in the seven weeks to 20 March, but was flattered by the timing of Mother's Day, which boosted the figure by about 1 percentage point. "We are not pessimistic about the outlook but we are cautious. We expect headline like-for-like sales growth will be flat to 1 per cent up," he said.

The company, which has long bemoaned the City's obsession with like-for-like sales, preferring to focus on its earnings per share, reported pre-tax profits of £353.3m - higher than it had guided the market to expect in January - against £301.2m last year. Earnings per share grew by 34 per cent, reflecting the £846m it has spent on buying back its stock in the past four years.