In its interim results for the first six months ending July 31, 2014, UK-based fashion retailer NEXT said it had a good first half, achieving sales and profits ahead of its original expectations.
Led primarily by retail stores sales growth and from NEXT Directory, its online business, sales in the first half of fiscal 2014 were 10.3% ahead of comparable first half of fiscal 2013 revenues. In the same period profit before tax too rose 19.3% year-on-year.
In the first half of fiscal 2014, turnover at NEXT rose 10.3% from £1,849.6 million to £1,677.2 million in the same period of fiscal 2013. Of which, Directory sales rose 16.2%, revenues in UK grew 11.5%, whilst overseas sales increased by a massive 80%, all up from the comparable period of last year.
"Over the last six months, we have experienced strongest sales growth for many years. We have made good progress improving and extending our ranges, opening profitable new space, improving our service and growing our online business", NEXT said.
The retailer added, "An improving economy, low interest rates, increasing availability of credit, less general discounting on the high street and much better summer weather have, we believe, all contributed to an improvement in our sales performance."
It continued, "We remain mindful that some of these factors are likely to be less favourable next year and this year's fine summer weather could present tough comparatives next year, when interest rates are also expected to rise."
Next said, its retail sales were 7.5% ahead of last year; full price sales were up 8.6%, whilst markdown sales were down 3.8% from last year and trading space rose by 107,000 square feet in the first half of the year and expects to open around 350,000 square feet in the full fiscal year.
Operating margin in the first half of fiscal 2014 improved by 1.8% from 12.4% in the first half of fiscal 2013 to 14.2%. Of this, operating margin of its ecommerce business fell 1.3% to 24.8%.
NEXT said its balance sheet as of July 2014 remains strong, with net debt of £571 million up from £38 million in July 2013, financed by £788 million of long term bonds and supported by £300 million of undrawn committed bank facilities.
After special dividends and share buybacks of £254 million, the cash outflow at NEXT for the half year of fiscal 2014 was £54 million. Last fiscal year, it paid dividends totalling 129 pence and this fiscal year, it anticipates paying a total of 150 pence, an increase of 16.3% from last fiscal year.
NEXT informed that one-third of the anticipated full year dividend, that is 50 pence per share, will be paid as an interim dividend on Friday 2 January 2015 and shares will trade ex-dividend from 4 December and the record date will be 5 December.
NEXT added, "In addition to these ordinary dividends, we have already paid three special dividends this year; 50 pence per share in each of February, May and August and now we do not anticipate paying any further special dividends in the current year".
