Next set for 'benign' 2012 trade background
Retail giant Next is expecting a more gentle trading environment in 2012, it said this morning (3 August 2011). The Leicestershire company said a combination of reduced cotton prices and eased manufacturing capacity constraints in the Far East would make for a less pressurised trading environment. The comments came as Next revealed a sales rise of 3.2 per cent through its latest trading update.
Total Next brand sales for the six months to 30 July were up 3.2 per cent against last year, within the company's guidance range of +1.5 per cent to +4 per cent per cent given in May.
Retail sales dipped by 1.7 per cent, a result which was offset by a 15.1 per cent rise in online sales.
However, Next said its online directory sales figure was "somewhat flattered" by an increased allocation of sale stock. Full-price sales for its directory division were up 13.3 per cent over the six months.
In a statement, the company said it expected the cost price inflation in the second half of 2011 to remain at broadly the same rate of +8 per cent.
However, the company predicted that 2012 would be a more gentle trading year.
Next's statement read: "2012 looks like it will be a more benign year for cost price inflation. The combination of a sharp reduction in cotton prices, an easing of manufacturing capacity constraints in the Far East and the annualising of this year's VAT increase all mean that selling prices are unlikely to rise further for spring 2012."
During the six-month period, Next sold its Ventura communications arm for £65m, which it said produced an exceptional gain of £36m.
Next said it would use the proceeds of the sale to buy back and cancel its own shares.
Earlier this year, Next outlined the potential for £160m of share buybacks in the current year. It has now updated that guideline to £225m.
