Sales for the half year ending 27 July 2013 were 2.2% ahead of last year. This was near the mid-point of the guidance range we issued in March. The increase was driven by a combination of additional Next Retail selling space and increased online sales through the Next Directory. New selling space added 1.8% to total NEXT brand sales.
Operating profits were at the top end of our expectations, up 7.2%. The difference between profit and sales growth is largely explained by the differing performance of our full price business and markdown sales. Next brand full price sales were up 3.9%.
Next went into sale with 18% less stock than last year and markdown sales were consequently 13% down on last year. The combined effect of better full price sales, lower unprofitable markdown sales and good cost control, meant that operating margins improved in both retail and directory.
Next’s key financial objective is to deliver sustainable long term growth in earnings per share. To this end, the company continued to use surplus cash to buy back shares and in doing so we enhanced EPS by a further 6%.
Pre-tax earnings per share were up 14.0%. A lower tax rate further enhanced post-tax EPS, which were up 19.9%.