Next increases profit forecast after sales increase

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High Street clothing retailer Next has said full-price sales rose by 3.5% in the half year to 25 July.

The fashion company - seen as an indicator of the health of the retail sector - also said profits would be higher than expected.

That was better than previous guidance from the UK's second-largest clothing retailer, which has more than 500 stores in the UK and Irish Republic.

In late morning trade on Tuesday, shares in Next were up by more than 2%.

Next raised the mid-point of its profit guidance for the current financial year by 1.9% to £825m ($1.3bn), which it said matched current analyst forecasts.

The firm also raised full-year sales growth guidance to 3.5%-6%, from 1.5%-5.5%.

As well as shops in the UK and Ireland, the company also has about 200 mainly franchised stores overseas, as well as a catalogue and internet business.

Full-price sales from stores were up 0.8% and sales from its Directory catalogue were 7.5% higher. The firm said it had been helped by warm weather towards the end of the six-month period.

"Next's full-price trading stance means it was more than able to offset a weak May, and we believe this will once again result in a better gross margin out-turn relative to clothing peers," said Investec analyst Alistair Davies.