Retailer Next's profits rise 23%

Next says it expects modest growth over coming months

Fashion retailer Next's reported profits grew by 23% in 2003, much better than expected, the company said.

Pre-tax gains for Britain's third largest chain rose to £353m, during a year of "good growth", and beating analysts' expectations of around £340m.

The firm said the new financial year had got off to a good start, boosted by gift buying for Mother's Day.

Shares in Next, which increased its floor space by a fifth last year, were up by 1.76% in early trading.

'Better value'

Next retail sales were up 14% last year, while sales via its directory were up 13%.

Chief executive Simon Wolfson said that as a result of improved value Next's average selling price had declined.

"Some commentators see this as a concern, we do not.

"As long as price reductions are not at the expense of margin or quality then the drop in average selling price is an advantage.

"This delivers better value to our customers and so increases sales."

'Modest growth'

The news comes amid a consumer spending growth slowdown, as interest rates rise.

Fashion outlets are also facing an extra challenge, as supermarkets start selling clothes.

But Mr Wolfson told Reuters news agency: " "We're cautious, but not pessimistic. We don't think there will be a decline in consumer spending, but we think that the growth we're going to get will be modest."

He said he expected sales growth to be moderate in the coming months, toward the bottom of the firm's long-term, 2-4% target range.