UPDATE 2-Next says UK faces wait for consumer recovery
* Raises year profit guidance to 635-675 mln stg
* H1 total sales up 2.3 pct
* H1 retail sales down 0.9 pct, Directory sales up 8.3 pct
* Says expects little change to the consumer environment
* Shares rise up to 3.6 pct
By James Davey
LONDON, July 30 (Reuters) - Next, Britain's second-biggest clothing retailer, played down talk of an imminent consumer recovery by saying it does not expect any significant change to the trading environment for over a year.
Official data last week showed Britain's economy sped up between April and June on the back of stronger spending by consumers and businesses.
But Next Chief Executive Simon Wolfson played down the significance of the latest set of GDP numbers and said commentary in the wake of the data had been overdone.
"Reality is always far more important than perception," he told Reuters on Tuesday.
"For any sort of consumer recovery to happen we need to see wages growing faster than inflation, which means inflation needs to come down or we need more (economic) growth."
Wolfson, a prominent supporter of Britain's ruling Conservative Party who sits in the upper house of Parliament, said he did not see that happening over the next 16 months.
"The problem isn't that wages need to go up, that would itself be inflationary, the problem is we need real growth in the economy."
Wolfson was speaking after Next raised its full-year profit expectations after sales growth edged up in its second quarter, driven by a robust performance from its Directory internet and catalogue business and better weather.
That sent its shares, which have risen by more than a half over the last year, up to 3.6 percent higher.
The group, which also trades from over 500 stores in Britain and Ireland and about 200 stores overseas, said total sales rose 2.3 percent in the 26 weeks to July 27.
That was just above first-quarter growth of 2.2 percent and consistent with previous sales guidance for the full 2013-14 financial year of growth of 1-4 percent.
Next adjusted that guidance to growth of 1.5-3.5 percent.
It also raised and narrowed guidance for pretax profit to 635-675 million pounds ($975 million-$1.0 billion) from 615-665 million pounds previously, and for growth in earnings per share to 8-15 percent from 4-13 percent previously, assuming a share buyback of 250-350 million pounds.
The firm has generally been able to defy the economic downturn, helped by its strong online offer, a constant stream of profitable new store openings and diversification into homewares and overseas markets.
Next said sales in its stores were down 0.9 percent in the period, while Directory sales were up 8.3 percent.
The firm had a much smaller end of season sale, with 20 percent less stock than last year, meaning lower markdown sales and a 10 million pounds boost to first half profit.
"Another strong performance from the home delivery service provided some ballast to the retailer's numbers. In an ultra-volatile retail climate this consistency is key," said James McGregor, director of retail consultants, Retail Remedy.
Next said consumers are becoming more spontaneous in their purchasing habits.
"As a result, weekly sales are more affected by short term events such as a change in the weather, the timing of Bank Holidays, (and) school holidays," it said.
Next shares were up 133 pence at 5,040 pence at 0835 GMT, valuing the firm at 7.84 billion pounds.
- Housing, jobs data weaken, but overall economic picture still upbeat
- Exclusive: Secret contract tied NSA and security industry pioneer |
- Putin critic Khodorkovsky in Germany after pardon |
- Target probe looks overseas, stolen cards offered online
- Pizza outlet attacked as India, U.S. fail to cool diplomat row |