Fashion and homewares retailer Next has reduced its profit guidance despite reporting a growth in half year sales and profit.
According to its latest trading update for the six months ended July 2022, total sales rose 12.8% to £2.4bn from £2.1bn against the same period last year. Overall pre-tax profit increased 15.5% to £400.6m from £346.7m.
Retail sales grew 63% to £880.5m from £540.1m, while online sales dipped 5% to £1.4bn from £1.5bn.
Within its licensing division, Home sales for the period rose 58% to £3.6m from £2.3m.
Commenting on the results, Next, which invested £3.5m in a 25% stake in furniture retailer Swoon in March 2022, said: “August trade was below our expectations and cost of living pressures are set to rise in the coming months. Sales in September have improved, and we may see benefits from recent Government measures.
“It is a very difficult call but, on balance, we have decided to reduce our forecast for full price sales in the second half from +1% to -1.5% versus last year. We have reduced our profit guidance for the full year from £860m to £840m, up +2.1% on last year.”
Furthermore, Next said it expects to close 16 mainline stores this year, with three not being able to agree acceptable new terms with landlords, while four are being merged into other larger stores. The other nine closures are in locations where it forecasts that the store would not achieve its target margin.