Next, Britain's second-largest fashion retailer, said its market had not worsened since August and appeared to be stabilising as it met forecasts for first-half profit and outlined plans to grow earnings.
"Nothing that we've seen in our performance since an August 4th update has changed our outlook," chief executive Simon Wolfson said today.
"In our August statement we said that we'd seen a cooling of demand. We haven't seen any further deterioration. The retail environment seems to be relatively stable," he said.
Although results of UK retailers have generally started to improve following the recession, many experts think the sector faces a harsh winter as the government cuts spending and raises taxes to rein in a record public deficit.
"Next does not expect a double dip recession nor do we anticipate a meltdown in consumer spending, not least because overall employment levels are holding steady. However, we are expecting very little by way of growth in total consumer spending for the foreseeable future," said Wolfson, who was recently ennobled as a Conservative peer.
He said Next would seek growth by increasing retail space, especially for home products, expanding its Next Directory home shopping business and investing overseas. These opportunities could raise sales by 2-5 per cent per annum over three to five years, and increase operating profit by 2-7 per cent per annum, he said.
Using surplus cash to finance annual share buybacks of 4-5 per cent of Next's issued share capital would further enhance earnings per share.
Shares in Next, which prior to today's update had increased by 22 per cent over the last year, outperforming a 4 per cent fall in the UK general retailers index, were up 4.9 per cent at 2,141 pence at 0952 GMT, valuing the business at £4.0 billion.
Next, which runs over 500 stores in Britain and Ireland, met company guidance with a 15 per cent rise in pretax profit to £213 million.
Revenue increased 5 per cent to £1.59 billion, with a 1.5 per cent fall in like-for-like retail sales offset by a 7.8 per cent rise in sales at its Directory business.
Next maintained its guidance for the balance of the year. It expects underlying retail sales to fall by 1.5 to 4.5 per cent in the second half, with directory sales up 4 to 8 per cent, and forecasts full-year profit to rise 6 to 11 per cent to £535-560 million, and EPS growth of 13-18 per cent.
It reiterated its August warning that shoppers face a 5 to 8 per cent rise in clothes prices early next year as the firm passes on sharp increases in the price of cotton and overseas wage cost inflation, echoing concerns raised earlier this week by Primark and Debenhams.
Next, which ended the period with net debt of £494 million, raised its interim dividend by 6 pence to 25 pence.
Separately today, British fashion group French Connection said it had swung to a first-half profit at businesses it plans to keep but had seen a drop in underlying sales in recent weeks.
Reuters