Balmy July weather helped Next (NXT) grow half-year operating profit by 7 per cent to £285m, at the top end of management expectations, despite a small dip in high street sales. This was partly because the retailer went into the summer sale with 18 per cent less stock to clear as most of the summery items had already flown off the shelves. That meant more sales at full price and 13 per cent fewer markdown sales, leading to significant margin improvement. Extra floor space helped, too, and another big contribution from the directory business where online sales jumped 8.3 per cent. However, running out of summer ranges and not enough so-called "transitional" stock means the second half got off to a rocky start.
Overseas, online sales inched up 2.9 per cent, and trading there was so encouraging that management has revised its full-year sales forecasts from £75m to £90m. Cutting operating costs and passing the savings on to customers through price reductions was responsible for much of the success. Franchise partners did well, too, and Next also closed six directly-owned loss-making stores. That meant operating margin at the international retail and franchise division improved by 3.5 percentage points to 12.6 per cent, generating profit growth of 50 per cent to £5.1m.