Next released it half-year results for the period to July on Thursday and said that full-price sales rose 4.4% while total group sales including subsidiaries were up 8%. Meanwhile group profit before tax rose 7.1% to £452 million.

Total group sales rose to £2.946 billion and as well as profit before tax rising by more than 7%, profit after tax jumped 5.2% to £341 million.

And the company added that full-price sales over the first six weeks of its second half have “materially exceeded our expectations” with an increase so far of 6.9%.

As a result, the company has upgraded its guidance with full-year full-price sales now expected to be up 4%, total group sales to rise 6.6% and full-year pre-tax profit to be 8.4% higher at £995 million. That’s £15 million above its previous guidance.

Next is justifiably upbeat about these figures and said it’s in a more positive frame of mind than in recent years, as well as seeing new avenues of growth and a more stable business.

But challenges remain and during the first half, the UK business – as expected – only grew by 1%, held back by “tough comparisons with last year’s exceptionally warm Q2”.

Yet the company believes that the sluggish performance in the UK this time can be mainly attributed to that previously impressive performance in 2023 and is nothing to do with any fashion or marketing missteps in recent months. It’s supported in this view by the sharp recovery in the last six weeks as weather comparatives have notably turned in its favour.

Focus on newness

However, the company added that it would be a mistake to only blame the weather in relation to its UK business. It said some areas performed much better than others and in general it found success when it was strong on newness, choice (both in terms of styles and sizing) and quality. 

In fact, it said product teams that were “brave and seized opportunities” with new trends reaped rewards. Those who relied on last year’s best sellers generally fared poorly. That doesn’t mean it was introducing risky and edgy trend-led products, but it was committing to fashion updates that consumers embraced. 

Also positive for the UK, it said that its Label business – which is its non-Next brands – saw a revival with a 5.5% uplift. Sales of third-party brands had flatlined in H1 last year and the company’s focus on ensuring it has strong brands appears to have paid off this time.

Meanwhile it’s wholly-owned and licensing business did well with a 7.7% rise. 

International strength

As for the overseas business, it did “exceptionally well” in the first half with a sales 23% leap to £433 million. This was driven by a very healthy performance on its own direct-to-consumer sites that were up 15%, and even stronger growth through third-party aggregation sites with a rise of 43%. 

And the company sees plenty of international growth potential for the future. In addition to selling Next overseas, it’s beginning to sell its other wholly-owned brands beyond the UK (such as Love & Roses, Friends Like These and Cath Kidston). In territories where it has both a well-developed customer base and distribution hubs (Mainland Europe and the Middle East) it may also have an increasing opportunity to sell the third-party Label brands that it sells in the UK.

It’s powering ahead in developing its business with aggregators and in Europe plans to begin trading via two new partners within the next few months. The early trials have been successful in selling its wholly-owned brands and licensed products through such partners and it plans to grow this offer in the year ahead.

Apart from Europe, it’s also targeting markets further away although it recognises its limitations here in terms of servicing such locations from the UK and has been signing franchise and license deals with local operators. 

That includes Myntra in India and Nordstrom in the US. In the latter case its business remains very small but it’s adding new product categories and wholly-owned brands next year and is also launching a trial with another major US retailer next month. 

That said, the company added it’s “concerned that some shareholders might get carried away with the strength and potential of our Overseas business. For the avoidance of doubt, it is unlikely that our share in overseas markets will equal that which we achieve in the UK or Ireland anytime soon, if ever”.

Nonetheless, it’s likely that shareholders probably will get a bit carried away on Thursday given this stellar set of results and it’s undeniable that Next remains one of the top-performing UK fashion companies with no signs that the situation is likely to change any time soon.