Next exceeds expectations in H1

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  •    Author: Mike Jasfer
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Full-price sales at Next were up +4.3% (total brand sales, including markdown sales up +3.8%) YoY for the HY ended July 2019. 
“Retail sales in the first half were better than we had expected,” reports Next. “After accounting for the addition of space, LFL full-price sales were down -4.9%, significantly better than the -10% LFL sales decline modelled in our 15-year stress test, which we published in March 2019. We believe that the better sales performance was, in part, down to improvements in stock availability.”
In-store sales fell -5.5% during the half, while online sales, which now outweigh those in-store, grew +12.6%.
The business asserts that stores are crucial to its online service, as they currently receive 82% of customer returns. Next hopes to implement further operating efficiencies in the coming year to help offest the diseconemies of scale inherent in offering an ever-wider choice of products. Next says that around 35% of the units ordered online are returned (around 40% by value).
Group profit before tax was up +2.7%. The average number of active customers increased by +13.6% YoY to 5.9m, driven mainly by overseas growth and UK customers paying in cash.
Steve Miley, senior market analyst at, comments: “With Next’s value increasing more than +50% since the beginning of the year, the investors have been anxiously awaiting the half-yearly report looking for confirmation of the recent trend continuing.  
“The company’s strategy of increasing sales online, that carries a lower fixed cost burden, is paying out. It remains to see how the growth rate will be maintained and how fast unprofitable stores would be curtailed.”

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