High Street darling Next has shown that retailers can do well amid the challenges posed by the cost of living crisis as it provided an upbeat update on trading.
The clothing and homeware specialist said it grew sales by 5.7% in the latest quarter compared with the same period in 2023 putting it on course for another successful year.
The update covers a period during which retailers faced cuts in spending by consumers who have spent months battling with the surge in the inflation rate fuelled by Russia’s war on Ukraine.
This has reflected sharp increases in the cost of energy and commodities, which some retailers have tried to pass on to consumers.
Interest rate rises imposed by the Bank of England to tackle inflation have led to big rises in the cost of many homeowners’ mortgages.
While the rate of inflation has slowed recently the prices of many goods and borrowing costs remain well above pre-pandemic levels.
READ MORE: Tesco accused of profiteering as it highlights fall in inflation
However, Next has managed to grow sales during a period which has seen a number of clothing retailers founder.
In March the UK business of fashion chain Ted Baker, which was founded in Glasgow, went into administration.
The same month luxury clothing retailer Matchesfashion went into administration weeks after it was acquired by Frasers Group.
Next, which developed out of the Hepworth menswear business, has shown the ability to update its ranges to respond to changes in fashion and to offer goods at prices which consumers are prepared to pay.
It still faces stiff competition from established names and a host of new firms which have emerged in recent years, including online operations such as Boohoo.
Next has used its retail nous and the strength of its logistics systems to help breathe life into businesses that struggled under other owners.
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The group added Victoria’s Secret lingerie to its offering under a licensing deal struck in 2020 after the UK arm of the business went into administration.
It bought the Made.com furniture business and clothing brand Joules in May 2022.
Marks and Spencer has also enjoyed success in recent months after enduring a long period in the doldrums. The company has benefited from a revamp of its clothing range.
READ MORE: Marks and Spencer to open stores in Ayrshire and Dundee
Businesses of the scale of Next and M&S can use their muscle to fund huge marketing campaigns and to help them get favourable terms from suppliers and landlords.
However, the update from Next underlines the crucial importance of having an effective online presence for retailers.
The group said its retail sales flatlined in the 13 weeks to April 27. By contrast, online sales increased by 8.8%. These include click and collect sales, which help to boost footfall in stores, and sales for home delivery. On its website Next boasts that it has been offering a next day delivery service since 2000.
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