Next walks tall on the high street: Stores provide star performance as profits rise by nearly 100 per cent

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The Independent Online
NEXT, the fashion group, yesterday confirmed its position as one of the stars of Britain's high streets when it announced a near-doubling in profits for the year to January, and said sales in the current year are about 18 per cent ahead of 1993.

The group made a pounds 73.5m profit before tax, up from pounds 38.9m last time, on sales 12.3 per cent ahead at pounds 544.2m. David Jones, chief executive, said the main reason for the growth was the development of the Next brand, including the merging of ranges carried by the stores and Next Directory.

The top performance again came from the high-street chain, where sales rose by pounds 60m to pounds 392.3m while profits jumped pounds 19.7m to pounds 44.1m. Although the number of branches fell slightly, from 305 to 300, expansion in the size of some and relocation of others pushed up selling space by 1.6 per cent. Sales per square foot rose 16 per cent to pounds 475.

High-street sales since 1 February have been increasing at a similar rate to 1993, while those through the Directory are now running slightly ahead. That compares with an 8.8 per cent increase in Next Directory sales to pounds 98.8m last year, which boosted profits by pounds 2.1m to pounds 8.5m.

Next is experimenting in the US, where it opened a store in Boston last September. A further store, in a Washington shopping mall, is due to open next month and the group would like another mall site in Boston. The costs of the first opening were written off, producing a pounds 1.8m loss.

Mr Jones said it was 'very early days' for the trial. 'We will make up our mind in the next 12 to 18 months if we are to continue or shut up shop.' He added that the costs of opening new stores would be less than the Boston write-off.

The group also intends to revamp its Interiors range of home furnishings, which is currently available in 60 stores. Mr Jones said Next had established its women's, children's and menswear ranges in the market, and was now aiming to assess whether home furnishings can be established as a fourth part of the business.

Interiors currently accounts for about 4 per cent of sales and makes little profit, although it occupies parts of stores that may otherwise not be used profitably. The new range will be available in the autumn 'and we will then assess it to see if it can be developed properly', Mr Jones said.

The group's cash balance increased to pounds 87m, compared with pounds 12m last time, including pounds 36m ( pounds 53m) at Club 24, its finance operation. Last week it paid pounds 23.5m for the consumer credit business of Clydesdale, the electrical retailing company.

Lord Wolfson, chairman, said the group was not anxious to spend the cash pile. 'If you have a good business and want to expand, you should be able to get the cash,' he said. 'If you have got the cash, that is not a good reason to go out and expand anyway.'

Some of the funds were used to push up the dividend from 2.5p to 5.5p, via a 4p (2p) final. Earnings per share rose from 9.9p to 17.3p, although Mr Jones warned that the tax charge was likely to double from the abnormally low level of 12.6 per cent in the current year.

(Photograph omitted)